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Gold, silver prices back down as risk aversion recedes

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Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) - Gold and silver prices are lower in early U.S. futures trading Thursday, as risk appetite has quickly returned to the global marketplace on ideas the U.S. and Iran have stepped back from the brink of an escalating military conflict that had been brewing for months. Statements coming from the U.S. and Iran strongly suggested such the past 24 hours, including President Trump saying Iran is “standing down.” February gold futures were last down $6.30 an ounce at 1,553.90. March Comex silver prices were last down $0.187 at $17.98 an ounce.

Most market watchers don’t at all expect the U.S. and Iran to become friendly, but more likely is Iran’s clandestine operations against the U.S. that have been carried on by Iran and its proxies for years. Meantime, the U.S. will continue to put the screws to Iran by harsh economic sanctions and working to prevent the nation from developing a nuclear weapon.

Global stock markets rallied Thursday. U.S. stock indexes are pointed toward firmer openings and at record highs when the New York day session begins. Nymex crude oil prices have come down from a spike high and are trading around $59.75 a barrel.

Traders and investors are getting back to examining economic data and other market fundamentals, including awaiting Friday morning’s December U.S. employment situation report from the Labor Department. Wednesday’s stronger-than-expected ADP national employment report has some leaning toward a stronger non-farm jobs number in Friday’s report, which has been forecast to come in at up 160,000.

Global stock markets were also buoyed Thursday on reports China has confirmed it will sign a “Phase 1” trade deal with the U.S. next week. China’s senior trade official will travel to Washington, D.C. for the signing. A partial trade deal between the world’s two largest economies should work to boost global economic growth in 2020.

In overnight news, the Euro zone jobless rate was reported at 7.5% in November, unchanged from October and in line with market expectations.

Inflation in China picked up and hit an eight-year high, at up 2.9% in 2019. The main culprit was rising pork prices due to major disease decimating China’s hog herd.

The World Gold Council has reported world central banks bought a net 41.8 metric tons of gold in October. That was 16% lower than in September and 29% below August. However, analysts believe the gold purchase pace from the central banks will pick up in 2020.

U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly chain store sales index. Several Federal Reserve officials are also slated to give speeches Thursday.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage, but have faded this week. A price uptrend is still in place on the daily chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,590.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,530.00. First resistance is seen at the overnight high of $1,562.40 and then at the September high of $1,571.70. First support is seen at $1,550.00 and then at the overnight low of $1,541.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls still have the overall near-term technical advantage but a four-week-old price uptrend line is now in jeopardy. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $18.895 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.50. First resistance is seen at today’s high of $18.225 and then at $18.55. Next support is seen at today’s low of $17.825 and then at $17.50. Wyckoff's Market Rating: 6.0.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.