(Kitco News) - Gold and silver market bulls have had another good trading week, with both metals hitting new all-time highs. Now, heading into a three-day U.S. holiday weekend, the shorter-term futures traders are ringing the cash register and taking some profits. Also, late this week has seen risk aversion in the general marketplace downtick. February gold was last down $9.00 at $4,614.70. March silver prices were down $1.667 at $90.675.
U.S. dollar index headed for third straight weekly gain. The U.S. dollar index on Thursday hit a six-week high and is holding around steady in early trading today. The USDX is poised for a third consecutive weekly gain as strong U.S. economic data has tempered expectations for additional Federal Reserve interest rate cuts. Weekly jobless claims came in well below forecasts, signaling a resilient labor market, while some manufacturing surveys also exceeded expectations. Several Fed officials also highlighted signs of labor market stability and cautioned against potential inflationary risks.
Kansas City Fed chief: keep interest rates steady. Federal Reserve Bank of Kansas City President Jeff Schmid said U.S. interest rates should stay at a level where they continue to put some pressure on the economy so that inflation can cool further. Schmid on Thursday said he does not think further cuts in interest rates will do much to patch over any cracks in the labor market, which he believes are driven by structural factors. Schmid also spoke about the Fed's independence and its federalized structure, saying that the decentralized system allows for differing views on the correct course of monetary policy, which he considers a strength.
U.S., Taiwan reach trade deal. The U.S. and Taiwan agreed to a trade pact that would lower tariffs on goods imported from Taiwan to 15% and see Taiwanese semiconductor companies increase financing for American operations by $500 billion. Taiwan's technology industry would commit to making at least $250 billion in direct investments to expand advanced semiconductor, energy and artificial intelligence operations in the U.S. Taiwan also agreed to provide an additional $250 billion in credit guarantees for further investment in the American semiconductor supply chain.
China clamps down on high-frequency traders. China’s government is removing computer servers dedicated to high-frequency traders from local exchanges' data centers, a move led by regulators that will affect both domestic and global firms, said a report. The change will impact the speed advantage that high-frequency traders have used to beat rivals, as they will no longer be able to get slightly quicker execution by using servers located in the exchanges' own data centers. Futures exchanges have made preliminary plans to add latency to any servers that connect from third-party computer rooms, which will further reduce the speed advantage of high-frequency traders. Commodities futures exchanges in Shanghai and Guangzhou are among those that have ordered local brokers to shift servers for their clients out of data centers run by the bourses, according to the people, who said the move was led by regulators.
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 $4,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,400.00. First resistance is seen at the record high of $4,650.50 and then at $4,675.00. First support is seen at Thursday’s low of $4,584.50 and then at $4,550.00. Wyckoff's Market Rating: 8.0.
March silver futures bulls have the strong chart advantage and their next upside price objective is closing prices above solid technical resistance at $100.00. The next downside price objective for the bears is closing prices below solid support at $80.00. First resistance is seen at the overnight record high of $93.70 and then at $94.00. Next support is seen at Thursday’s low of $86.125 and then at $85.00. Wyckoff's Market Rating: 9.5.
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