(Kitco News) - Gold and silver prices are higher near midday Tuesday, on more safe-haven demand following the weekend U.S. raid in Venezuela that captured its dictator but more importantly has precious metals traders pondering what lies ahead, geopolitically, in the coming months. The near-term technical postures for gold and silver have also markedly improved the past week. February gold was last up $43.50 at $4,495.20. March silver prices were up $3.983 at $80.605.
There’s an old market adage that says the bond market traders are the smartest guys/gals in the room. That may be the case most of the time, but I’m going to argue precious metals traders, at present, appear to be the smartest in the room. Reason: While stock and financial markets are taking the U.S. raid on Venezuela mostly in stride, with some global stock indexes hitting record highs this week and other markets mostly calm, it appears precious metals traders are more wisely looking over the horizon and pondering what the U.S. raid in Venezuela may mean for the geopolitical front in the coming months. For example, President Trump has warned other Central and South American countries about their illicit drug shipments to the U.S. and has said the U.S. will re-exert its influence in the Western Hemisphere. Trump has also expressed interest in the U.S. acquiring Greenland. A Blomberg report today said if the U.S. takes over Greenland, the NATO defense organization would be dead. China, Russia and other nations have criticized the U.S. for its raid on Venezuela, but China may have just gotten the door open a little more in its intent to reclaim Taiwan—so it can beef up its own dominance in the Eastern Hemisphere. And after the U.S.-Isreal major air strikes against Iran last summer, that nation has become politically unstable with civil unrest growing. Meantime, war-torn Russia’s President Putin is watching it all unfold amid Russia’s own decaying economy and Putin’s only global playing card being a bulging but aging nuclear stockpile. It seems precious metals traders are correctly taking all of the above into account much more so than the stock and financial markets—at least so far. Indeed, all of the above taken together, or even in parts, is enough to more than move the needle on continued safe-haven demand for gold and silver.
Copper futures climbed above $6 per pound overnight, hitting a new record high amid expectations of a further tightening in global supplies this year. “Traders are increasingly concerned that the Trump administration could introduce new tariffs on refined metals, diverting shipments into the U.S. and leaving major trading hubs such as London and Shanghai short of supply,” said TradingEconomics.com. Prices were also supported by a robust global demand outlook, particularly from power grid upgrades, renewable energy projects and data center expansion.
The key outside markets today see the U.S. dollar index higher. Crude oil prices are slightly down and trading around $58.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.2%.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
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 today’s high of $4,501.80 and then at $4,550.00. First support is seen at the overnight low of $4,437.90 and then at $4,400.00. Wyckoff's Market Rating: 8.0.
March silver futures bulls’ next upside price objective is closing prices above solid technical resistance at the record high of $82.67. The next downside price objective for the bears is closing prices below solid support at last week’s low of $69.225. First resistance is seen at today’s high of $80.795 and then at $82.67. Next support is seen at $79.00 and then at $77.00. Wyckoff's Market Rating: 8.5.
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