(Kitco News) - Gold and silver prices are sharply higher at midday 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. A solidly lower U.S. dollar index and higher crude oil prices today are also working in favor of the two precious metals. April gold was last up $120.00 at $5,100.00. March silver prices were up $6.275 at $83.18.
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.
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.
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, while the U.S. dollar index sold off following the China news.
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 last week’s low of $4,670.00. First resistance is seen at last week’s high of $5,113.90 and then at $5,200.00. 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 last week’s low of $63.90. First resistance is seen at $85.00 and then at $87.50. Next support is seen at $80.00 and then at the overnight low of $78.10. Wyckoff's Market Rating: 5.0
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