Inflation fears fuel strong rallies in gold, silver
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 futures prices are sharply higher and at two-month highs in midday U.S. trading Wednesday. The precious metals are seeing good buying interest amid growing worries about rising global price inflation, as well as some geopolitics presently at play. Bullish outside markets—a weaker U.S. dollar index and higher crude oil prices—are also working in favor of the metals market bulls at mid-week. February gold futures were last up $29.10 at $1,841.50 and March Comex silver was last up $0.718 at $24.21 an ounce.
Risk aversion is somewhat heightened at mid-week. The Biden Administration said it thinks Russia may be on the brink of invading Ukraine. North Korea is test-firing missiles again, and terrorists attacked the United Arab Emirates with drones a few days ago. And bond yields are rising on rising inflation concerns. Global stock markets were mixed to weaker overnight. U.S. stock indexes are slightly higher at midday, following solid losses Tuesday.
In overnight news, U.K. inflation rose to a 30-year high as the consumer price index rose 5.4% in December, year-on-year.
|Gold investors should see the glass as half full even after disappointing 2021 – VanEck's Joe Foster|
The key outside markets today see crude oil prices higher, at a seven-year high and trading around $87.25 a barrel. The International Energy Agency forecast that global oil demand in 2022 will exceed that of the pre-pandemic levels. The U.S. dollar index is weaker today. The U.S. Treasury 10-year note yield is presently fetching 1.89%. The U.S. two-year note yield has pushed above 1.0%. The 10-year German bond (bund) yield moved into positive territory for the first time in nearly three years, fetching 0.008%.
Technically, February gold futures hit a two-month high today. Bulls have the firm overall near-term technical advantage and gained more power today. Bulls' next upside price objective is to produce a close above solid resistance at the November high of $1,881.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,781.30. First resistance is seen at today’s high of $1,843.40 and then at $1,850.00. First support is seen at $1,833.00 and then at $1,820.00. Wyckoff's Market Rating: 7.0
March silver futures prices hit a two-month high today. The silver bulls have gained the overall near-term technical advantage. A four-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at this week’s low of $22.82. First resistance is seen at today’s high of $24.265 and then at $24.50. Next support is seen at $24.00 and then at $23.68. Wyckoff's Market Rating: 6.0.
March N.Y. copper closed up 840 points at 446.60 cents today. Prices closed nearer the session high today. The copper bulls have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 460.10 cents. The next downside price objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at today’s high of 448.85 cents and then at 451.15 cents. First support is seen at 440.00 cents and then at this week’s low of 438.10. Wyckoff's Market Rating: 6.5.