(Kitco News) - Gold and silver prices are higher in early U.S. trading Monday. The precious metals markets are seeing safe-haven demand amid a geopolitical scene that does not see super hot spots at present, but instead several global matters that are simmering and come to a boil in a hurry. April gold was last up $55.70 at $5,034.80. March silver prices were up $2.82 at $79.72.
China to blame for speculative blow-off in gold prices: Bessent. U.S. Treasury Secretary Bessent cited Chinese traders as a reason behind recent wild swings in the gold market. “The gold move thing — things have gotten a little unruly in China,” Bessent said on Fox News’ Sunday Morning Futures and as reported by Bloomberg. “They’re having to tighten margin requirements. So gold looks to me kind of like a classical, speculative blow-off.” Bessent was responding to a question about a record-breaking rally in precious metals — fueled by speculative buying, geopolitical turmoil and concern about the Federal Reserve’s independence—that abruptly ended in late January. Meantime, the CFTC reported money managers slashed their bullish wagers on gold futures to the lowest since October as the precious metal recently suffered its biggest price plunge in more than a decade. Hedge funds and other large speculators reduced net-long positions by 23% to 93,438 contracts for the week ended Feb. 3. The level was the lowest in 15 weeks, CFTC data showed Friday.
Busy U.S. economic data week. The January U.S. jobs report on Wednesday and the consumer price index, due Friday, are unusually close together on the calendar after the partial federal government shutdown delayed each by a few days. “The employment report will be even more substantive than usual. In addition to the monthly payrolls and unemployment numbers, each January release includes an annual revision to the jobs count. The so-called benchmark update is expected to reveal a notable markdown to payrolls growth in the year through March 2025,” Bloomberg reported. As for the regular monthly figures, economists predict payrolls rose 69,000 in January. The unemployment rate is seen holding at 4.4%, near a four-year high. In the CPI data, economists will look for more evidence that inflation is on a downward trend after previous reports were complicated by last year’s record-long government shutdown. Forecasters expect an underlying metric of inflation — which excludes food and energy costs — to rise at the slowest annual pace since early 2021. Government figures on Tuesday are projected to show another month of solid retail sales in December. The monthly USDA supply and demand report is also out at midday Tuesday. National Association of Realtors data due on Thursday will probably show sales of previously owned homes declined in January, said Bloomberg.
China advises its domestic financial institutions to reduce U.S. Treasury holdings. Chinese regulators have advised financial institutions to rein in their holdings of U.S. Treasuries, citing concerns over concentration risks and market volatility, Bloomberg reported today. Officials urged banks to limit purchases of U.S. government bonds and instructed those with high exposure to pare down their positions, but the directive doesn’t apply to China’s state holdings of U.S. Treasuries. “The move was framed around diversifying market risk rather than anything to do with geopolitical maneuvering or a fundamental loss of confidence in U.S. creditworthiness,” said the report. U.S. Treasury futures prices were modestly down overnight, following the China news.
Japanese ruling Liberal Democrats see landslide win in lower house election. Japanese Prime Minister Sanae Takaichi hailed the strong mandate she won in her election landslide over the weekend and vowed to build trust with financial markets as concerns grow over how she’ll pay for a planned tax cut. Speaking Monday in her first press briefing since leading the ruling Liberal Democratic Party to its most dominant election win in Japan’s post-war history, Takaichi acknowledged concerns among investors over the plan to cut the sales tax on food items for two years. She reiterated plans to avoid issuing bonds to fund the measure while vowing to look for other revenue streams or savings, including revision of subsidies and tax exemptions. She didn’t provide further details, Bloomberg reported. “Markets on Monday provided at least a temporary reprieve from ructions that have threatened to undermine Takaichi’s spending plans. Japanese equities surged to fresh record highs, while the yen and government bonds stayed noticeably calmer than many had feared following weeks of volatility fueled by concerns about fiscal sustainability,” said the report. Takaichi’s election victory is handing Chinese leader Xi Jinping a dilemma: Engage with Japan’s most popular post-war leader or continue a deep freeze with the U.S.’s top ally in Asia, added Bloomberg.
Bessent: Start Warsh Fed chair Senate hearings… U.S. Treasury Secretary Scott Bessent on Sunday suggested the U.S. Senate start hearings on President Trump’s pick to lead the Federal Reserve despite a vow from a key Republican to block all such nominations from advancing until a criminal investigation targeting current chair Jerome Powell is resolved. Senator Thom Tillis, a North Carolina Republican and member of the Banking Committee that holds hearings for nominees to the central bank, has said he will block all of Trump’s Fed nominations until the Department of Justice probe into Powell’s statements to Congress last year about renovations at the Fed’s headquarters are completed. “Senator Tillis has come out and said he thinks that Kevin Warsh is a very strong candidate,” Bessent said on Fox News’ Sunday Morning Futures and as reported by Bloomberg. “So I would say: Why don’t we get the hearings under way and see where Jeanine Pirro’s investigation goes,” Bessent said. Pirro, the U.S. attorney for the District of Columbia, is leading the probe against Powell and has issued subpoenas for the case.
Iran says some progress made in nuclear talks with U.S. Iran’s President Masoud Pezeshkian over the weekend described the Friday nuclear talks with the U.S. as “a step forward,” even as he pushed back against any attempts at intimidation. “Dialogue has always been our strategy for resolving issues peacefully,” Pezeshkian said in an X posting on Sunday and as reported by Bloomberg, referring to the talks that featured Iranian Foreign Minister Abbas Araghchi, U.S. special envoy Steve Witkoff and President Trump’s son-in-law, Jared Kushner. Trump characterized Friday’s talks as “very good” and said another meeting was set for early this week. The renewed engagement comes under the shadow of a continued U.S. military buildup in the Middle East and fresh American sanctions targeting Iran’s oil shipments. Trump has threatened strikes on Iran, citing both Tehran’s crackdown on protests as well as its nuclear and ballistic missile programs.
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, April gold futures bulls’ next upside price objective is to produce a close above solid resistance at $5,250.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $4,423.20. First resistance is seen at the overnight high of $5,069.00 and then at last week’s high of $5,113.90. First support is seen at the overnight low of $4,988.60 and then at $4,900.00. Wyckoff's Market Rating: 6.5.
March silver futures bulls see the next upside price objective is closing prices above solid technical resistance at last week’s high of $92.015. The next downside price objective for the bears is closing prices below solid support at $60.00. First resistance is seen at the overnight high of $82.125 and then at $83.00. Next support is seen at $77.50 and then at $76.00. Wyckoff's Market Rating: 4.5
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