Gold, silver see big corrective pullbacks from recent gains
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(Kitco News) - Gold and silver futures prices are sharply lower in midday U.S. trading Wednesday, on some routine profit taking from the shorter-term futures traders and some chart consolidation after gold hit a two-month high overnight and silver scored a four-month high. No significant chart damage was inflicted upon either metal today. February gold futures were last down $46.60 at $1,907.80 and March Comex silver was last down $0.515 at $27.125 an ounce.
U.S. stock indexes are mixed to higher at midday. Tuesday’s vote for two U.S. Senate seats in Georgia sees one Democrat declared the winner and the other Democrat with a very slight lead. If both seats go to the Democrats, which appears most likely, they would then control the Senate. A Democrat-controlled Congress would likely lead to higher corporate taxes and likely more spending that would produce higher inflation.
The U.S. economic data point of the morning was be the ADP national employment report for December, which showed a surprisingly large drop in jobs after a modest rise was expected. This report is the precursor to the more important Employment Situation Report issued by the Labor Department on Friday morning. That report is expected to show a U.S. unemployment rate of 6.8% and a non-farm jobs rise of 50,000 in December, versus a rise of 245,000 in November.
The other key economic report today is the afternoon release of the minutes of the last meeting of the Federal Reserve’s Open Market Committee (FOMC).
The U.S. dollar index is higher on a corrective bounce after hitting another 2.5-year low in overnight trading. The other important outside market sees February Nymex crude oil futures prices higher, at a 10-month high, and trading around $50.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 1.05%, a 10-month high and also indicative that inflation could be igniting. For perspective, the German 10-year government bond (bund) sees its yield currently at -0.54%.
Technically, February gold futures prices scored a bearish “outside day” down today after hitting a two-month high early on. The gold bulls still have the overall near-term technical advantage. A five-week-old price uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at today’s high of $1,962.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,920.00 and then at $1,935.00. First support is seen at $1,900.00 and then at $1,890.00. Wyckoff's Market Rating: 6.5
March silver futures backed way off today’s high to score a bearish “outside day” down on the daily bar chart. Silver futures bulls still have the firm overall near-term technical advantage. A five-week-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August 2020 high of $30.365 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at $27.635 and then at today’s high of $28.105. Next support is seen at today’s low of $26.70 and then at $26.50. Wyckoff's Market Rating: 7.0.
March N.Y. copper closed up 125 points at 365.15 cents today. Prices closed nearer the session low today after hitting an eight-year high early on. The copper bulls have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 375.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 345.00 cents. First resistance is seen at today’s high of 370.75 cents and then at 372.50 cents. First support is seen at 360.00 cents and then at Tuesday’s low of 355.60 cents. Wyckoff's Market Rating: 8.5.