Gold, silver see price weakness amid bearish outside markets
(Kitco News) - Gold and silver prices are lower in early U.S. trading Thursday. There is moderate price pressure on the metals coming from the key outside markets being in bearish daily postures—weaker crude oil prices and a higher U.S. dollar index. This week's rise in U.S. Treasury bond yields and keener trader and investor risk appetite this week are also negatives for the safe-haven metals. February gold was last down $7.10 at $1,778.40 and March Comex silver was last down $0.227 at $22.215 an ounce.
Global stock markets were mixed but mostly firmer in overnight trading. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. It's been a very good week for the U.S. stock index bulls and Thursday sees a normal corrective pullback from the strong gains.
In overnight news, Bloomberg reports Fitch Ratings cut China Evergrande Group to restricted default over its failure to meet bond interest payments on Monday. The downgrade may trigger cross defaults on the developer's $19.2 billion of dollar debt. Fitch also cut Kaisa Group Holdings Ltd. to restricted default, citing failure to pay a $400 million dollar bond that matured Tuesday. Said Bloomberg: "It seems clear that there will be no bailout for struggling developers from Beijing with People's Bank of China Governor Yi Gang saying that the inability to meet obligations is a market event and will be dealt with in a market-orientated way."
Traders are looking ahead to the U.S. data point of the week, Friday's November consumer price index report, which is expected to come in up 0.7% from November and be up 6.7%, year-on-year.
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China inflation data, released overnight, showed its producer price index up 12.9%, year-on-year, which was a decline from last month but still hotter than expected.
The key "outside markets" today see Nymex crude oil prices weaker and trading around $72.00 a barrel. Crude oil bulls have also had a very good week. The U.S. dollar index is higher. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.494%. U.S. bond yields have risen this week, on ideas of a tighter U.S. monetary policy and stronger U.S. economic growth in the coming months.
U.S. economic data due for release Thursday is light and includes the weekly jobless claims report and monthly wholesale trade.
Technically, February gold futures bulls have the slight overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,761.00. First resistance is seen at the overnight high of $1,788.40 and then at this week's high of $1,794.30. First support is seen at this week's low of $1,772.40 and then at last week's low of $1,762.20. Wyckoff's Market Rating: 5.5
The March silver bears have the firm overall near-term technical advantage. Prices have been trending down for three weeks. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.46. First resistance is seen at the overnight high of $22.475 and then at this week's high of $22.635. Next support is seen at last week's low of $22.035 and then at $22.00. Wyckoff's Market Rating: 2.5.