(Kitco News) - Gold and silver prices are sharply lower in midday U.S. trading Tuesday, pressured as the U.S. dollar index is powering higher and hit a nine-month high, while at the same time U.S. Treasury yields are on the rise. These two outside market elements on this day are trumping the elevated risk aversion in the general marketplace. April gold was last down $190.60 at $5,120.80. March silver prices were down $5.704 at $82.60.
Traders and investors appear more concerned today than on Monday, due in part to notions that Iran appears to be deliberately trying to exhaust U.S. and Israeli air defense systems and missile stocks. A common theme in the marketplace is that a $20,000 drone launched by Iran is being taken out by a U.S. or Israeli missile that costs $1 million or more. Marion Messmer, international security program director at Chatham House, said the U.S. has been purchasing fewer interceptor missiles annually than it has been using, creating a potential vulnerability. Iran has also threatened to attack any ship entering the Strait of Hormuz. The marketplace may also today be factoring in a longer war than they thought one day ago.
The key outside markets today see the U.S. dollar index solidly up and hitting a six-week high, with Nymex crude oil prices sharply higher, hitting a nine-month high, and trading around $76.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.0 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 bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $5,434.10. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $5,000.00. First resistance is seen at $5,200.00 and then at $5,250.00. First support is seen at $5,000.00 and then at $4,900.00. Wyckoff's Market Rating: 5.5.
March silver bulls see their next upside price objective is closing prices above solid technical resistance at this week’s high of $95.86. The next downside price objective for the bears is closing prices below solid support at the February low of $71.815. First resistance is seen at $85.00 and then at $87.50. Next support is seen at today’s low of $79.00 and then at $77.50. Wyckoff's Market Rating: 5.0.
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