Gold, silver rally as metals bulls gain momentum
Gold and silver futures prices are sharply higher and near their daily highs at midday Wednesday, on chart-based buying and bets being placed on “the inflation trade.” U.S. stock indexes that hit new record highs today did not stand in the way of the metals market bulls. Gold and silver prices have rebounded well off this week’s lows to suggest both metals have put in near-term bottoms. February gold futures were last up $24.30 at $1,864.60 and March Comex silver was last up $0.41 at $25.73 an ounce.
The highlight of the U.S. trading day was the presidential inauguration of Democrat Joe Biden. Biden will be reversing many of outgoing President Trump’s executive orders. Biden and his Democrat-controlled Congress are also set to roll out big spending plans that could further lay the seeds for problematic price inflation down the road. Incoming U.S. Treasury Secretary Janet Yellen on Tuesday told lawmakers that going “big” on spending is needed to begin to repair the severe economic damage caused by the pandemic. This has the “inflation trade” bulls licking their chops at present.
Global stock markets were mixed but mostly higher overnight. Aside from the inauguration, it’s a big corporate earnings week in the stock market.
In overnight news, the Euro zone December consumer price index came in at up 0.3% from November and down 0.3%, year-on-year. Those numbers are not anywhere close to suggesting rising inflation, and even hint that deflation may become the problem.
The key “outside markets” today see the U.S. dollar index slightly lower as bulls are fading this week following the recent good rebound from a 2.5-year low scored earlier this month. Meantime, Nymex crude oil futures prices are higher, trading around $53.30 a barrel and near a 10-month high. The yield on the benchmark 10-year U.S. Treasury note stands at 1.12%.
Technically, February gold futures see this week’s price action that begins to signal a near-term market bottom is in place. The gold bulls have gained the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close 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 $1,800.80. First resistance is seen at today’s high of $1,870.40 and then at $1,885.00. First support is seen at $1,850.00 and then at today’s low of $1,831.10. Wyckoff's Market Rating: 5.5
March silver futures also see this week’s gains as beginning to signal a near-term market bottom is in place. The silver bulls have gained the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the January high of $29.105 an ounce. The next downside price objective for the bears is closing prices below solid support at this week’s low of $24.04. First resistance is seen at today’s high of $25.85 and then at $26.00. Next support is seen at today’s low of $25.06 and then at $24.365. Wyckoff's Market Rating: 5.5.
March N.Y. copper closed up 55 points at 363.85 cents today. Prices closed near mid-range today. 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 368.40 cents and then at the January high of 373.40 cents. First support is seen at this week’s low of 355.85 cents and then at 352.50 cents. Wyckoff's Market Rating: 7.5.