Gold, silver sharply up as USDX sinks, oil rallies, bond yields stable
Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.
(Kitco News) - Gold and silver prices are posting strong gains in midday U.S. trading Thursday. The metals market traders on this day reckoned rising inflation prospects are bullish, as is shown by market history. A lower U.S. dollar index today, higher crude oil prices and stable U.S. Treasury yields are also friendly for the precious metals bulls. The safe-haven metals rallyied today despite upbeat trader and investor risk appetite late this week. Trading in the metals markets this week is a prime example of the old trading adage, "markets can remain illogical longer than traders can remain solvent." February gold was last up $34.00 at $1,798.50 and March Comex silver was last up $0.955 at $22.50 an ounce.
Traders and investors Thursday were still digesting the U.S. Federal Reserve FOMC meeting results. The FOMC statement somewhat surprisingly said three interest rate increases are likely in 2022, and that U.S. inflation is rising but suggested it will back off in the coming months. The FOMC is accelerating its monthly asset purchases tapering, which will end in March. The marketplace correctly expected a hawkish lean from the FOMC, but the better clarity on timing and actions of the Fed appeared to assuage traders of many markets, as evidenced by the rally in U.S. stock indexes, stable bond yields and a weaker U.S. dollar index.
The pandemic never seems to stray too far from the front burner of the marketplace. Bloomberg today reports "the lockdown mentality turning London into a ghost town is starting to feel like the real thing as Europe resurrects stiff border controls and another Christmas looks set to be lost to the virus."
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The key "outside markets" today see Nymex crude oil prices solidly higher and trading around $72.50 a barrel. The U.S. dollar index is solidly lower today but still not far below its recent high. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.43%.
Technically, February gold futures prices hit a two-week high today. Bulls have regained the overall near-term technical advantage with today's big gains. Bulls' next upside price objective is to produce a close above solid resistance at $1,840.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week's low of $1,753.00. First resistance is seen at $1,811.40 and then at $1,819.30. First support is seen at $1,785.00 and then at today's low of $1,775.70. Wyckoff's Market Rating: 6.0
March silver futures saw short covering featured after prices hit another nine-week low Wednesday. The silver bears still have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.635 and then at $23.00. Next support is seen at $22.00 and then at this week's low of $21.41. Wyckoff's Market Rating: 2.0.
March N.Y. copper closed up 1,225 points at 430.55 cents today. Prices closed nearer the session high today and saw short covering after prices hit a nine-week low on Wednesday. The copper bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 451.15 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 397.05 cents. First resistance is seen at today's high of 432.15 cents and then at this week's high of 433.30 cents. First support is seen at today's low of 422.10 cents and then at 420.00 cents. Wyckoff's Market Rating: 4.0.