(Kitco News) - Gold and silver prices are higher in early U.S. trading Friday, on corrective bounces following solid selling pressure this week. Both markets hit six-week lows Thursday amid worries about problematic inflation keeping central banks’ monetary policies tighter. April gold was last up $54.90 at $4,660.60. May silver prices were up $0.97 at $72.19.
Gold sees worst week in six years. Gold prices are headed for their biggest weekly loss in six years due to war in the Middle East boosting energy and reducing expectations for central bank interest rate cuts. The precious metal has dropped every week since the U.S. and Israel attacked Iran last month, with bullion trading near $4,675 an ounce, down about 7% this week. Despite the recent pullback, gold remains about 8% higher this year, with some analysts suggesting a temporary drop in prices may boost central bank buying once more.
China stocking up on silver. “China’s ravenous appetite for silver lifted overseas purchases to an eight-year high at the start of 2026, as importers fed a surge in industrial and investment demand,” said Bloomberg in a report. The world’s biggest buyer pulled in over 790 tons in the first two months, including nearly 470 tons in February, the highest ever for that month, according to Chinese customs data on Friday. Strong demand has pushed local prices well above international benchmarks, whittling down already-low exchange stockpiles and hoovering up metal from abroad. Silver prices have never had such a volatile start to a year, soaring about 70% on a wave of speculative buying from China and elsewhere, before abruptly giving up their gains at the end of January. The strong import figures suggest physical consumption in China has been sustained despite shifts in trading flows.
Latest on the war in Iran…
--Iran continues Gulf strikes after Israel vows to spare energy sites after Trump rebuke
--Crude oil and gas prices declined as the U.S. and Israel sought to reassure investors
--Global stocks are set for a third weekly loss, with no end in sight to the war
--EU bracing for a potentially years-long energy squeeze following strike in Qatar
--Kuwait to partially shut its Al Ahmadi refinery
--The UAE and Saudi Arabia said they intercepted missiles overnight
--Asian countries turn to coal for energy as Iran war rapidly shrinks supplies of gas
--Oil market’s seaborne tanker buffer runs down fast as Iran war drags on
U.S. Treasury yields up-tick amid inflation concerns. U.S. Treasury yields continued their advance higher today as markets reacted to hawkish comments from central banks and elevated crude oil prices. Two-year yields climbed four basis points to 3.83%, while the 5-year yield gained three points to 3.91%, as market participants dialed back expectations for U.S. Federal Reserve interest rate cuts this year because of the spike in oil prices that is further stoking fears of problematic inflation. Prior to the start of the Iran war, swaps traders were pricing in 61 basis points of Fed easing; now they expect just three. “The inflation backdrop is growing increasingly problematic for the Fed and rate cuts are not likely anytime soon,” James Reilly, senior markets economist at Capital Economics, wrote in a note and as reported by Bloomberg. The Federal Reserve, European Central Bank and the Bank of England all held their interest rates steady this week as they grapple with an uncertain outlook because of the conflict in the Middle East. Central bank officials are signaling to markets that they are ready to act soon if necessary to contain inflationary pressures.
The key outside markets today see the U.S. dollar index up, with Nymex crude oil prices slightly higher and trading around $96.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.3 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 $5,000.00. 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 $4,738.20 and then at $4,800.00. First support is seen at $4,600.00 and then at this week’s low of $4,505.00. Wyckoff's Market Rating: 4.0.
May silver futures bulls see their 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 $64.66. First resistance is seen at the overnight high of $74.62 and then at $75.00. Next support is seen at $70.00 and then at $67.50. Wyckoff's Market Rating: 4.0.
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