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Downside price corrections in gold, silver; Powell on deck

Jim Wyckoff

Kitco News

Welcome to Kitco News' 2023 Outlook Series. Uncertainty continues to dominate financial markets as central bank monetary policies push the global economy into a recession to cool down inflation. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2023.

(Kitco News) - Gold and silver prices are weaker in early U.S. trading Tuesday, on normal corrective pullbacks following recent gains. A firmer U.S. dollar index and an uptick in U.S. Treasury yields are bearish outside market forces for the metals on this day. February gold was last down $2.20 at $1,875.60 and March silver was down $0.281 at $23.585.

Traders and investors today are awaiting the morning remarks from Federal Reserve Chairman Jerome Powell, who will be speaking at a Riksbank conference in Sweden. Despite a "Goldilocks" U.S. jobs report last Friday, Fed officials' remarks since then are still leaning hawkish on U.S. monetary policy and a "higher for longer" interest rate scenario.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

Risk appetite in the general marketplace has improved a bit this week as China has been opening up its businesses and its borders in a pivot from its strict Covid restrictions.

The key outside markets today see the U.S. dollar index higher on a corrective bounce after strong losses Monday that pushed the index to a multi-month low. Nymex crude oil futures prices are modestly up and trading around $75.00 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching around 3.558%.  

 Gold will be instrumental in China's plan to create an international oil/renminbi market - BNP Paribas

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store sales reports, the NFIB small business index, the IDB/TIPP economic optimism index and monthly wholesale trade.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at this week's high of $1,886.40 and then at $1,900.00. First support is seen at this week's low of $1,869.30 and then at $1,850.00. Wyckoff's Market Rating: 8.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the firm overall near-term technical advantage. A choppy, four-month-old uptrend is still in place on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at this week's high of $24.285. Next support is seen at the January low of $23.26 and then at $23.00. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff

For Kitco News

Contact jwyckoff@kitco.com
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.