(Kitco News) - Gold prices are lower and hit a three-week low, while silver prices are strongly down, in early U.S. trading Wednesday. Both metals are experiencing extreme daily price volatility, which can be catastrophic for both the bulls and bears who are shorter-term futures traders, amid the major whipsaw price action. February gold was last down $44.40 at $4,441.90. March silver prices were down $6.139 at $71.78.
After posting big price gains on Tuesday, following absorbing huge losses on Monday, the gold and silver markets today are sharply lower again. Other commodity futures traders are closely eyeing the metals futures markets and their extreme daily price volatility—providing a bearish lean. CME Group said it will raise margins on precious metals futures for the second time in a week. Margins for gold, silver, platinum and palladium contracts will increase after the close of business today, CME said in a statement. The decision was made based on a review of “market volatility to ensure adequate collateral coverage,” CME said.
In other news… Russia, Ukraine continue to strike each other’s Black Sea ports. Russia and Ukraine struck each other’s Black Sea ports overnight, damaging infrastructure including an oil refinery. A drone attack on the Russian coastal city of Tuapse hit a berth at the port and the local refinery, according to the emergency services and as reported by Bloomberg. In Ukraine, Russian forces struck the port city of Odesa, injuring at least six people and damaging residential properties and infrastructure, according to local authorities. Some residents are without power, water and heating. Moscow and Kyiv have repeatedly targeted each other’s Black Sea ports in recent months, compounding challenges for shippers of various commodities from grains to oil.
Greenback limps out of 2025. The U.S. dollar is poised for its sharpest annual retreat on the foreign exchange market in eight years and investors say more declines are coming if the next Federal Reserve chief opts for deeper interest-rate cuts as expected. Bloomberg reports its Dollar Spot Index has fallen 8.1% this year so far, and the U.S.'s policy path diverges from some of its developed peers, further dimming the dollar's appeal. The biggest factor for the dollar in the first quarter will be the Fed, and who will be the Fed Chair after Jerome Powell ends his term, said the Bloomberg report.
Chinese President Xi upbeat on his economy. President Xi Jinping declared China’s economy is set to hit its growth target in 2025, after what he called an “extraordinary year.” China’s gross domestic product is expected to expand by around 5% this year, Xi told an annual gathering held by the country’s top political advisory body, according to the official Xinhua News Agency and as reported by Bloomberg. “China’s economy is forging ahead under pressure, moving toward innovation and quality, demonstrating strong resilience and vitality,” Xi told an annual meeting of the Chinese People’s Political Consultative Conference. “The growth rate is expected to reach around 5%, continuing to rank high among the world’s major economies.” Xi earlier signaled a tolerance for slower growth in some regions and even said recently that China should crack down on “reckless” projects, highlighting his focus on the quality, rather than pace, of economic growth. Meantime, the RatingDog China general manufacturing PMI rose to 50.1 in December from November’s 4-month low of 49.9, topping estimates of 49.8. It marked a marginal return to growth in factory activity as output turned positive and new orders expanded for a seventh straight month. The reading aligned with official data showing a modest rise in manufacturing after eight months of decline.
The key outside markets today see the U.S. dollar index slightly up. Crude oil prices are up a bit and trading around $58.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.143%.
Technically, February gold futures bulls’ next upside price objective is to produce a close above solid resistance at the contract/record high of $4,584.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,200.00. First resistance is seen at the overnight high of $4,384.90 and then at $4,400.00. First support is seen at the overnight low of $4,284.30 and then at $4,250.00. Wyckoff's Market Rating: 7.0.
March silver futures see Monday’s price action still appearing to have produced a big and bearish buying exhaustion tail, whereby the bulls run out of gas at the high and prices back way off to close near the daily low. Silver also saw a big and bearish “key reversal” down on the daily bar chart Monday. The bulls’ next upside price objective is closing prices above solid technical resistance at Monday’s record high of $82.67. The next downside price objective for the bears is closing prices below solid support at $67.50. First resistance is seen at $73.00 and then at $74.00. Next support is seen at $70.00 and then at $69.00. Wyckoff's Market Rating: 7.0.
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