(Kitco News) - Gold and silver prices are sharply down in early U.S. trading Monday, on profit taking from the shorter-term futures traders after recent good gains. A rally in the U.S. dollar index to a two-plus year high today and rising U.S. Treasury yields are also bearish outside-market elements to start the trading week. February gold was last down $26.10 at $2,688.90. March silver was down $0.904 at $31.41.
Asian and European markets were mostly down overnight. U.S. stock indexes are solidly lower and hit multi-week lows overnight. Stock traders are still digesting the strong U.S. jobs report last Friday that pushed U.S. Treasury yields and the U.S. dollar index higher.
Also worrisome to equities bulls, China posted a wider-than-expected trade balance overnight, which may encourage the incoming Trump administration to push harder for fresh tariffs on Chinese exports to the U.S. and start another, harsher, trade war with China. China’s trade surplus soared last year to an unprecedented $992 billion as exporters rushed to make up for sluggish domestic demand.
The U.S. data point of the week is the consumer price index for December, due out Wednesday. CPI is seen coming in at up 2.9%, year-on-year, versus up 2.7% in the November report. Excluding food and energy, the “core” CPI is seen rising 0.2% after four straight months of 0.3% increases, according to a Bloomberg survey. The core CPI is forecast to have risen 3.3%, year-on-year, unchanged from readings from the previous three months.
The key outside markets today see the U.S. dollar index up and hit a two-plus year high. Nymex crude oil futures prices are up, hit a six-month high, and are trading around $78.25 a barrel. New Western sanctions on Russian oil exports are credited in part for the recent rally in crude. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.8%. The 10-year note yield stood at 3.65% when the Federal Reserve started cutting U.S. rates in September.
U.S. economic data due for release Monday includes the employment trends index, the monthly retail chain stores sales index and the monthly Treasury budget statement.
Technically, February gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the December high of $2,761.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the December low of $2,596.70. First resistance is seen at $2,700.00 and then at today’s high of $2,723.80. First support is seen at the overnight low of $2,683.00 and then at $2,673.70. Wyckoff's Market Rating: 7.0.
March silver futures bulls and bears are on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at the January high of $31.84. The next downside price objective for the bears is closing prices below solid support at the December low of $29.145. First resistance is seen at $31.00 and then at at today’s high of $31.465. Next support is seen at the overnight low of $30.255 and then at $30.00. Wyckoff's Market Rating: 5.0.
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