(Kitco News) - Gold and silver prices are strongly lower Friday morning, in the aftermath of a new Federal Reserve chair that may not lean quite so easy on U.S. monetary policy than many were expecting. Profit taking and weak long liquidation from the shorter-term futures traders are featured in gold and silver today. April gold was last down $242.60 at $5,112.50. March silver prices were down $15.63 at $99.08.
Kevin Warsh Trump’s choice for next Fed chair; markets react. President Trump has selected Kevin Warsh to be the next Federal Reserve chair, Trump announced on social media this morning. Warsh visited the White House Thursday. Reports surfaced late Thursday that Warsh would be Trump’s new Fed chair nominee. U.S. stocks dropped sharply and U.S. Treasury yields pushed higher, while gold and silver prices posted strong losses, following the Warsh news, while the U.S. dollar index rose. These markets’ reactions reflected speculation Warsh may be less enthusiastic to cut interest rates than other Fed chair candidates, given his past warnings of inflation risks and more recent calls for the Fed to reduce its balance sheet. However, Warsh has more recently echoed Trump’s criticism of the Fed for being too slow to ease its monetary policy. “He’s a hawk,” said CNBC commentator Joe Kernen, regarding Warsh’s stance on U.S. monetary policy. “That’s good for the stock market longer-term, but not right now,” Kernen said.
In other news, the London Metal Exchange suffered a one-hour delay to the start of trading on Friday due to a potential technical issue. The delay came after a week of intense volatility and price gains, with LME copper jumping 11% on Thursday to hit a record above $14,500 a ton. The LME said "the market is now operating normally" after electronic trading got underway at 10:00 a.m. Hong Kong time, with copper falling as much as 3.9% after the opening.
Major U.S. government shutdown averted. President Trump and U.S. Senate Democrats have reached a tentative deal to avoid a disruptive federal government shutdown as the White House continues to negotiate with the Democrats on placing new limits on immigration enforcement policy. “Trump announced that an agreement had been reached and urged both parties to vote for it. However, lawmakers are almost certain to fail to enact the measure before a Friday night deadline. While a short funding lapse and partial government shutdown is now seen as the most likely scenario, the effect on federal operations would be minimal if it’s swiftly resolved within a couple days,” Bloomberg reported. The deal between Trump and Democrats makes it more likely that lawmakers would be able to avoid a long shutdown, which occurred last year.
Crude oil prices hit six-month highs Thursday. Nymex WTI crude oil futures on Thursday rose more than 3.5% to around $65.50 a barrel, the highest intraday level since last September and nearing the strongest close since last August, as geopolitical risk premiums increased following renewed U.S. threats against Iran. Prices backed off a bit overnight. President Trump warned Tehran to agree to a nuclear deal or face military strikes, saying U.S. naval forces in the region were prepared to act if necessary. The prospect of a U.S. strike against Iran raised concerns over potential disruptions to Middle Eastern crude oil flows, which account for roughly one-third of the global oil supply, while any Iranian retaliation could threaten shipping through the Strait of Hormuz, a key route for oil and liquified natural gas. Oil prices have risen this early year despite expectations of oversupply and forecasts late last year for a global crude oil glut in 2026.
The key outside markets today see crude oil prices weaker and trading around $65.00 a barrel. The U.S. dollar index is slightly up and the U.S. 10-year Treasury note yield is presently 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, price action late this week in April gold futures has formed a bearish “key reversal” down on the daily bar chart, which is one chart clue that a market top is in place. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $5,626.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,750.00. First resistance is seen at $5,200.00 and then at $5,250.00. First support is seen at the overnight low of $4,962.70 and then at $4,900.00. Wyckoff's Market Rating: 8.0.
March silver futures bulls are also fading. The next upside price objective is closing prices above solid technical resistance at the record high of $121.785. The next downside price objective for the bears is closing prices below solid support at $90.00. First resistance is seen at $102.50 and then at $105.00. Next support is seen at the overnight low of $95.12 and then at $92.50. Wyckoff's Market Rating: 8.0.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Sign up here; it’s real easy. https://www.kitco.com/services
