(Kitco News) - Gold prices are solidly higher but down from the session high that saw another new all-time high overnight. President Trump said at a speech to the World Economic Forum in Davos, Switzerland that he won’t use force to acquire Greenland. That took some of the risk aversion out of the marketplace after Trump had said a couple weeks ago he would not rule out using military force to take Greenland. Silver prices are weaker on profit taking from the shorter-term futures traders. February gold was last up $84.80 at $4,850.30. March silver prices were down $1.036 at $93.59.
Gold and silver prices this week have extended their record rallies as the crisis over Greenland and a meltdown in Japanese government debt support safe-haven demand. February Comex gold futures hit an all-time high of $4,891.10 an ounce overnight, with March Comex silver futures on Tuesday hitting a new peak of $95.78 an ounce. Gold is poised for more support from central banks, with the National Bank of Poland approving plans to purchase another 150 tons and Bolivia's central bank resuming purchases for its foreign reserves, reports said.
Global bond traders closely monitoring Japan’s government bond market. A sharp rise in volatility in Japan’s government bond market could spill over into other markets, forcing some investors to cut back risk across portfolios, Citigroup Inc. said and as reported by Bloomberg.
“Risk parity funds may need to sell as much as one third of their current exposure, potentially triggering up to $130 billion of bond selling in the U.S. alone, according to Mohammed Apabhai. Volatility in Japan’s bond market has been picking up since early last year amid growing fiscal concerns, with meaningful spillover impact globally, and analysts now see Japan as a major exporter of global bond volatility,” said the report. Japanese Prime Minister Sanae Takaichi’s election pledge to cut food taxes has triggered a surge in long-end yields, with 30- and 40-year bond yields jumping more than 25 basis points to fresh highs on Tuesday. With a snap election in Japan coming on Feb. 8, traders and investors are worried there will be more volatility ahead.
The key outside markets today see crude oil prices slightly up and trading around $60.50 a barrel. The U.S. dollar index is near steady and the U.S. 10-year Treasury note yield is presently around 4.25%.
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 $5,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,539.10. First resistance is seen at the record high of $4,891.10 and then at $4,900.00. First support is seen at the overnight low of $4,761.50 and then at $4,700.00. Wyckoff's Market Rating: 9.5.
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 $85.00. First resistance is seen at the record high of $95.78 and then at $96.00. Next support is seen at today’s low of $92.115 and then at $91.00. Wyckoff's Market Rating: 9.0.
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