(Kitco News) - Gold and silver prices are solidly higher in early U.S. trading Wednesday, with silver again leading the way. The precious metals markets are in rally mode on safe-haven demand just ahead of the U.S. jobs report today. April gold was last up $88.10 at $5,119.10. March silver prices were up $5.106 at $85.465.
It’s jobs-Wednesday. That moniker is usually jobs-Friday, but the recent U.S. government shutdown pushed back the Labor Department’s monthly January U.S. employment situation report to today. The jobs report, in addition to the normal monthly payrolls and unemployment numbers, will include an annual revision to the jobs numbers. The so-called benchmark update is expected to reveal a notable markdown to payrolls growth in the year through March 2025. Economists expect today’s key non-farm payrolls number to rise by 55,000 in January. The U.S. unemployment rate is seen holding steady at 4.4%, near a four-year high. The consumer price index for January comes out Friday morning. Analysts look for CPI to come in up 0.3%, month-on-month and up 2.5%, year-on-year.
Chinese still squeezing the silver market. Despite silver prices becoming less volatile after an epic bout of turbulence, supplies in China are still being pinched as investment and industrial demand drain stockpiles, Bloomberg said in a report. “Domestic producers and traders are struggling to fill a backlog of orders, pushing up near-term prices and leaving the market heavily in backwardation. The front-month contract on the Shanghai Futures Exchange has surged to a record premium, indicating the market’s overwhelming preference for prompt deliveries of the metal,” said the report. “Such a large backwardation is driven by an inventory crisis and the depletion of deliverable material,” said Zhang Ting, senior analyst at Sichuan Tianfu Bank Co. “Institutions still have incentives to continue squeezing the market for profit.” Meanwhile, short sellers on the Shanghai Gold Exchange, who bet that silver prices would fall, have been paying long-holders deferral fees since late December to avoid having to make deliveries, highlighting a scarcity of metal to close positions, said Bloomberg.
U.S. FAA halts all flights into and from El Paso, Texas. The Federal Aviation Administration late Tuesday halted all flights to and from El Paso International Airport for 10 days, citing unspecified “special security reasons,” The New York Times reported. In a move that appeared to surprise local officials and airlines, the restriction went into effect at 11:30 p.m. local time on Tuesday and will remain until Feb. 20 for the airspace over El Paso and the neighboring community Santa Teresa, New Mexico, the F.A.A. notices said. They did not detail the security reasons that prompted them. The airport issued a travel advisory on social media saying that all flights to and from the airport had been grounded, including commercial, cargo and general aviation. It told travelers to contact their airlines for the latest status of their flights. The FAA did not immediately respond to a request for comment, said the Times. The airport in El Paso, the 23rd-most populous city in the nation according to the 2020 census, serves a vast swath of west Texas and eastern New Mexico.
China’s inflation rate below expectations. China’s annual inflation rate eased sharply to 0.2% in January, month-on-month, marking the lowest level since October and coming in below market expectations of a 0.4% rise. Food prices declined for the first time in three months, while non-food inflation also moderated. Meanwhile, producer prices declined 1.4%, year-on-year, the mildest drop in 18 months.
The key outside markets today see the U.S. dollar slightly down, with crude oil prices up and trading around $65.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.1 percent.
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 the overnight high of $5,144.50 and then at $5,200.00. First support is seen at the overnight low of $5,046.30 and then at $5,000.00. Wyckoff's Market Rating: 6.5.
March silver futures bulls see their 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 the February low of $63.90. First resistance is seen at $87.00 and then at $87.50. Next support is seen at $82.50 and then at the overnight low of $80.41. Wyckoff's Market Rating: 5.5.
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