Gold weaker but up from daily lows
(Kitco News) - Gold futures prices are moderately lower at midday Wednesday but well up from the session lows. Rising government bond yields are pressuring the precious metals markets at mid-week. The benchmark U.S. Treasury note is presently yielding near 1.4%, which is a one-year high. Bulls are also struggling from a technical perspective amid a pesky price downtrend in place on the daily bar chart. April gold futures were last down $9.00 at $1,797.20 and March Comex silver was last up $0.097 at $27.78 an ounce.
Global stock markets were mixed overnight, with Asian shares mostly down and European shares mostly up. A big government tax hike on trading shares in Hong Kong hit markets there and in London. U.S. stock indexes are higher at midday. This week marks the one-year anniversary of markets starting to get hit by the Covid-19 pandemic.
The marketplace pretty much took in stride Fed Chairman Jerome Powell’s testimony on U.S. monetary policy to the Senate Banking Committee on Tuesday. He spoke again today but did not make any big market-moving or surprising comments. Powell said the U.S. central bank is committed to a very accommodative monetary policy as long as the economy remains negatively impacted by the pandemic. “The economy is a long way from our employment and inflation goals,” he said. Powell said he expects a temporary rise in U.S. inflation, maybe over the next year, but not larger or persistent price increases, adding that he believes the big stimulus packages from the U.S. government will not cause problematic price inflation. As for rising bond yields recently, Powell said that is just “a statement of confidence” for an improving U.S. economic outlook.
The “reflation trade,” whereby notions that inflationary price pressures will rise and thus support upside price action in raw commodity futures markets, is gaining in popularity recently—or at least in marketplace discussions. Longtime market analyst Jeff Wilson of Pro Farmer has pointed out something which has apparently flown under the radar screen of much of the marketplace, but yet is still a significant development. The CME Group has successfully lobbied the Commodity Futures Trading Commission to raise for many markets (and some dramatically) the speculative futures contract trading limits that any one trader can hold, effective March 15. For example, in silver futures the limitation on one trader holding spot-month futures contracts was doubled from 1,500 to 3,000. Gold was left unchanged at 6,000 contracts. So what does this mean? It suggests to me that CME Group officials are suspecting much bigger trading volumes are coming in many futures markets later this year as the world comes out of the pandemic and amid a global financial system awash in cash from government central bank stimulus programs. This is potentially very good news for raw commodity market bulls and suggests there could be much bigger participation in trading raw commodity futures markets from the long side in the coming months, including gold and silver.
The key “outside markets” today see Nymex crude oil futures prices up, hitting a 13-month high and trading around $63.00 a barrel. The U.S. dollar index is near steady at midday today but the bulls have faded recently. The yield on the U.S. 10-year Treasury note is presently fetching around 1.4%.
Technically, April gold futures bears have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,759.00. First resistance is seen at this week’s high of $1,815.20 and then at $1,820.00. First support is seen at this week’s low of $1,778.60 and then at the February low of $1,759.00. Wyckoff's Market Rating: 3.0
March silver futures bulls have the overall near-term technical advantage amid a four-week-old price uptrend in place on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the February high of $30.25 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at today’s high of $28.005 and then at this week’s high of $28.425. Next support is seen at this week’s low of $27.285 and then at $27.00. Wyckoff's Market Rating: 6.5.
March N.Y. copper closed up 975 points at 427.60 cents today. Prices closed nearer the session high today and hit another contract and 9.5-year high. The copper bulls have the strong overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 435.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 390.00 cents. First resistance is seen at 430.00 cents and then at 432.50 cents. First support is seen at 420.00 cents and then at today’s low of 413.95 cents. Wyckoff's Market Rating: 10.0.