Gold price weaker as technicals turn more bearish

(Kitco News) - Gold and silver prices are modestly down in early U.S. trading Friday. Chart-based selling is featured to end the trading week. A higher U.S. dollar index and rising U.S. Treasury yields on this day are also bearish outside market forces working against the metals market bulls. April gold was last down $2.70 at $1,824.00 and March silver was down $0.226 at $21.08.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk appetite this week has not been keen, as the U.S. stock indexes hit multi-week lows on Thursday. It seems that this week it may have finally sunk into the general marketplace that the U.S. will keep its monetary policy tighter for longer, in order to successfully tamp down problematic inflation. That’s also a bearish scenario for the metals markets, from a global demand perspective.

The U.S. data point of the day Friday is the personal income and outlays report for January and its PCE price index component. The PCE core price index is forecast to come in at up 4.4%, year-on-year, which compares with up 4.4% in the December report.

The key outside markets this morning see the U.S. dollar index higher. Nymex crude oil futures prices are firmer and trading around $75.75 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.895%.

U.S. economic data due for release Friday includes personal income and outlays, new residential sales and the University of Michigan consumer sentiment survey.

Technically, the gold futures bears have the 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 last 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 $1.841.20 and then at week’s high of $1,856.40. First support is seen at $1,815.00 and then at $1,800.00. Wyckoff's Market Rating: 4.0

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 $21.395 and then at Thursday’s high of $21.67. Next support is seen at $21.00 and then at $20.79. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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