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Gold continues to rebound from early-week losses

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(Kitco News) - Gold prices are higher in midday U.S. trading Thursday as the bulls have stabilized the market and have gained some upside momentum late this week, after prices hit a five-month low Monday. Since Monday’s close, prices have rallied around $60 an ounce. A depreciating U.S. dollar index that hit another 2.5-year low today is working in favor of the metals markets bulls. February gold futures were last up $10.50 at $1,840.70 and March Comex silver was last up $0.03 at $24.11 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are higher at midday and at or near record highs. Risk appetite remains upbeat late this week. Reports say President-Elect Joe Biden is now also pushing a bi-partisan pandemic financial aid package for Americans, which would total just under $1 trillion. Gold and silver bulls are also benefitting from notions a package could get passed by the U.S. Congress in the coming weeks—not from a safe-haven point of view but from notions a fresh influx of cash into the financial system would boost demand for the metals and would further stoke price inflation that could be ignited down the road.

The marketplace is overlooking record U.S. daily Covid-19 deaths and near-record daily new infections. Many health experts said the death and infection numbers in the U.S. will remain high through the winter. European countries are also reeling from the virus and its impact on people and businesses. Evidence of a struggling Euro zone economy was seen Thursday when the bloc’s November composite purchasing managers index (PMI) came in at 45.3 compared to a reading of 50.0 in October. A reading below 50.0 suggests contraction in an economy.

The U.S. economic data point of the week is Friday morning’s U.S. employment situation report from the Labor Department. The key non-farm payrolls number in that report is expected to come in at up 440,000 workers. Wednesday’s U.S. ADP national employment report was a miss to the downside.

The U.S. dollar index is sharply lower today and hit another 2.5-year low. Commodity market traders, including metals traders, are watching the depreciating greenback closely, as it’s a bullish element. Most major raw commodities traded on the world market are priced in U.S. dollars. When the dollar weakens it makes those commodities cheaper to purchase in non-U.S. currency. The other important outside market sees January Nymex crude oil futures prices weaker and trading around $45.00 a barrel. The OPEC oil cartel is meeting late this week and is reported to be affirming raising its oil output quotas, with Russia doing the same. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.93%.

Live 24 hours gold chart [Kitco Inc.]

Technically, the February gold futures bears still have the slight overall near-term technical advantage. While prices are still in a three-week-old downtrend on the daily bar chart, more price gains Friday would likely negate the price downtrend. Also, gold prices have climbed back above the key 200-day moving average. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,767.20. First resistance is seen at $1,855.00 and then at $1,875.00. First support is seen at today’s low of $1,828.90 and then at $1,810.00. Wyckoff's Market Rating: 4.5

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls and bears are on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at the November high of $26.27 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.93. First resistance is seen at this week’s high of $24.455 and then at $25.00. Next support is seen at Wednesday’s low of $23.68 and then at $23.00. Wyckoff's Market Rating: 5.0.

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.