Gold price a bit weaker as bulls work to stabilize market

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(Kitco News) - Gold and silver prices are just slightly lower in early U.S. trading Wednesday, after solid losses posted on Tuesday, following hawkish remarks from the U.S. central bank chief. Silver prices hit a four-month low overnight. April gold was last down $1.40 at $1,818.70 and May silver was down $0.019 at $20.18.

The just-released ADP national employment report for February came in slightly hotter than expected, at up 242,000 jobs compared to a consensus forecast rise of 205,000. Traders and investors are looking forward to the February U.S. employment situation report from the Labor Department on Friday morning. The key non-farm payrolls component of the report is expected to show a rise of 225,000 jobs, following a mammoth rise of 517,000 in the January report.

Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.

The marketplace is still digesting Fed Chairman Jerome Powell’s testimony Tuesday morning on U.S. monetary policy to a Senate committee. Powell leaned hawkish, which was not surprising to many, but the marketplace did deem his remarks as being more hawkish than the central bank chief had been in the recent past. Powell said the Fed will likely have to keep U.S. interest rates higher for longer to win the war against problematic price inflation. He said recent stronger U.S. economic data has likely rolled back some of the softening the U.S. had seen on the inflation front the past few months. The U.S. dollar rallied sharply on Powell’s remarks and hit a three-month high. The U.S. stock indexes sold off on his remarks, as did crude oil. Powell speaks to a House of Representatives panel on Wednesday.

The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.972%. The 2-year note yield pushed above 5% for the first time since 2007, presently fetching 5.038%. The 2-year – 10-year note spread is presently the widest in decades. Historically, an inverted Treasury yield curve has portended tough U.S. economic times ahead.

The key outside markets today see the U.S. dollar index slightly higher and hit another three-month high overnight. Nymex crude oil futures prices are slightly down and trading around $77.50 a barrel.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the weekly DOE liquid energy stocks report and the Federal Reserve’s beige book.

Technically, the gold futures bears have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,864.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,825.00 and then at $1,835.00. First support is seen at the February low of $1,810.80 and then at $1,800.00. Wyckoff's Market Rating: 4.5

The silver bears have the firm overall near-term technical advantage. Prices are in a steep five-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at $21.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $20.505 and then at $21.00. Next support is seen at the overnight low of $19.955 and then at $19.50. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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