(Kitco News) - Gold prices are trading near unchanged and silver is firmer in early U.S. trading Thursday. Precious metals markets are pausing late this week as the marketplace is focused on the U.S. firepower build-up in the Middle East. April gold was last down $5.10 at $5,004.70. March silver prices were up $0.117 at $77.70.
U.S. bristling with firepower in Middle East; attack on Iran seems likely. “The Trump administration is closer to a major war in the Middle East than most Americans realize. It could begin very soon,” Axios reported Wednesday. CNN reported U.S. military strikes against Iran could occur as soon as this weekend. The Axios report said a U.S. military operation in Iran “would likely be a massive, weeks-long campaign that would look more like full-fledged war than last month's pinpoint operation in Venezuela.” Axios sources said it would likely be a joint U.S.-Israeli campaign that's much broader in scope than the Israeli-led 12-day war last June, which the U.S. eventually joined to take out Iran's underground nuclear facilities. “Such a war would have a dramatic influence on the entire region and major implications for the remaining three years of the Trump presidency…. By bringing so much force to bear, Trump has raised expectations for what an operation will look like if a deal can't be reached. And right now, a deal does not look likely,” said Axios. Trump's advisers Jared Kushner and Steve Witkoff met with Iran's Foreign Minister Abbas Araghchi for three hours in Geneva on Tuesday. While both sides said the talks made progress, the gaps are wide and U.S. officials aren't optimistic about closing them. Vice President JD Vance told Fox News the talks "went well" in some ways, but "in other ways it was very clear that the president has set some red lines that the Iranians are not yet willing to actually acknowledge and work through." Vance made it clear that while Trump wants a deal, he could determine that diplomacy has "reached its natural end." The U.S. armada has grown to include two aircraft carriers, a dozen warships, hundreds of fighter jets and multiple air defense systems. Some of that firepower is still on its way to the Middle East. Crude oil prices rose today, with Brent crude futures climbing above $71 a barrel and U.S. WTI crude futures surpassing $66 a barrel, their highest levels since last August, extending the nearly 5% surge recorded in the previous session, driven by the fears of a U.S.-Iran conflict.
FOMC minutes signal inflation concerns remain among policymakers. Wednesday afternoon’s release of the minutes of the January meeting of the Federal Open Market Committee showed policymakers signal renewed worries over inflation with several suggesting the Fed may need to raise interest rates if inflation stays above their goal. Several participants said they would have preferred a post-meeting statement that raised the possibility of raising the Federal funds rate “if inflation remains at above-target levels,” the minutes said. “While the minutes fell far short of suggesting most officials were contemplating the possibility of rate increases, they made clear the Fed is shifting farther away from agreeing on another cut. And that could put it on a collision course with the man President Trump has selected to be the next Fed chair,” Kevin Warsh, said a Bloomberg report.
The key outside markets today see the U.S. dollar index near steady, with crude oil prices higher and trading around $66.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 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 $4,670.00. First resistance is seen at this week’s high of $5,074.40 and then at $5,100.00. First support is seen at $4,900.00 and then at this week’s low of $4,854.20. Wyckoff's Market Rating: 6.5.
March silver futures bulls’ next upside price objective is closing prices above solid technical resistance at $90.00. 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 $80.00 and then at $82.50. Next support is seen at $75.00 and then at $73.00. Wyckoff's Market Rating: 5.0.
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