(Kitco News) - Gold prices are down and silver prices near steady in early U.S. trading Thursday, following a surprisingly deflationary report coming out of China overnight. U.S. stock index prices that this week set record highs are also a negative element for the safe-haven metals. April gold was last down $10.40 at $2,041.30. March silver was last up $0.015 at $22.375.
China, the world’s second-largest economy, reported its consumer price index fell a sharper-than-expected 0.8%, year-on-year, in January. That’s the fourth consecutive month of declines and the biggest contraction since 2009. China is facing “significant economic headwinds that could impact investors around the world,” said Nigel Green, the CEO of deVere Group. “Prolonged deflation in China poses a threat to its manufacturing and export sectors, key drivers of that nation’s economic growth and sectors often favored by international investors. The deflationary trend in China could also weigh heavily on commodities and industries dependent on natural resources.” Green said the cumulative effect of three years of economic downturn, “erasing a staggering $7 trillion of value, demands a departure from the smaller measures. It’s time for Beijing to adopt steps to reignite growth and restore confidence,” Green said.
China is getting ready for its Lunar New Year holiday that starts this weekend.
Asian and European stock markets were mixed in overnight trading. U.S. stock index futures are set to open modestly down today, on mild corrective pullbacks following their record highs set Wednesday.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are a bit higher and trading around $74.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching 4.125%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade and monthly retail chain store sales. U.S. Treasury Secretary Yellen testifies before the Senate and Federal Reserve Bank of Richmond president Thomas Barkin speaks to the Economic Club of New York.
Technically, the gold futures bulls 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 $2,100.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,053.80 and then at this week’s high of $2,059.10. First support is seen at Tuesday’s low of $2,038.80 and then at this week’s low of $2,030.80. Wyckoff's Market Rating: 5.5.
The silver bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $23.72. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at Tuesday’s high of $22.575 and then at this week’s high of $22.84. Next support is seen at the overnight low of $22.24 and then at $22.00. Wyckoff's Market Rating: 3.0.
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