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Price pressure on gold, silver on worries Fed hawkish for longer

Kitco News

(Kitco News) - Gold and silver prices are solidly lower in early U.S. trading Thursday, with gold hitting a six-week low and silver a 10-week bottom. Recent U.S. economic data, including a hot producer price index report Thursday, have the general marketplace is a keen risk averse mentality late this week. The marketplace is now worried about the Federal Reserve being aggressively hawkish for a longer period of time. Metals traders are deeming that notion as bearish for global demand prospects, as central banks clamp down on their monetary policies in order to slow economic growth and in turn tamp down inflation. April gold was last down $15.80 at $1,836.00 and March silver was down $0.34 at $21.37.

Global stock markets were lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Trader and investor risk aversion is keen to end the trading week. Said market analyst Craig Erlam of OANDA: "Equity markets are ending the week in the red after finally falling victim to the persistent disappointment of U.S. economic data on Thursday. It's taken a lot but it would appear investors' eternal optimism is being shaken, with the latest PPI figures finally driving the message home that bringing the U.S. economy in for a soft landing will be extraordinarily challenging and there'll likely be plenty of turbulence along the way. In reality, the message should have sunk in much sooner but investors were seemingly so convinced that these were just blips in the data that they failed to see how quickly they were stacking up." Erlam's comments fall in line with widely followed Morgan Stanley analyst Mike Wilson, who has been right on calling the stock market trajectory the past year or so. Read a Barron's headline today: "Markets are finally catching up with reality; time to price in rate rises."

Silver could have a cleaner downtrend compared to gold as the Fed looks to maintain its aggressive monetary policies - TD Securities

The key outside markets see the U.S. dollar index solidly higher and hitting a five-week high overnight. Nymex crude oil futures prices are solidly lower and trading around $76.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.908% and is on the rise late this week.

U.S. economic data due for release Friday includes import and export prices and leading economic indicators.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have lost their slight overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close in April futures above solid resistance at this week's high of $1,881.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at Thursday's high of $1,854.90 and then at Wednesday's high of $1,870.90. First support is seen at the overnight low of $1,827.70 and then at $1,820.00. Wyckoff's Market Rating: 5.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $22.635. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at the overnight high of $21.585 and then at $21.875. Next support is seen at the overnight low of $21.155 and then at $21.00. Wyckoff's Market Rating: 4.0.

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.