Gold Price Weaker, But Shaky U.S. Stock Market Limits Downside
New York (Feb 7) Gold prices are modestly down in early morning action Wednesday. A higher U.S. dollar index is working against the precious metals market bulls so far today. However, selling interest in safe-haven gold and silver is being limited by lower U.S. stock indexes amid still-volatile trading. April Comex gold futures were last down $2.90 an ounce at $1,326.60. March Comex silver was last down $0.06 at $16.525 an ounce.
Said Kitco veteran metals trader Peter Hug: “Gold continues to experience pressure as investors generate liquidity in the wake of the global equity shakeout.”
World stock markets posted solid rebounds overnight, following the lead of the U.S. stock indexes Tuesday. However, U.S. stock indexes are under selling pressure Wednesday morning, ahead of the U.S. day session. Serious near-term technical damage has been inflicted on the U.S. stock indexes recently, to suggest more selling pressure in the near term. Volatility is back in the stock and financial markets, after a long period of quieter daily trading.
Stalwart stock market bulls are blaming algorithmic traders for the steep sell-off, and pointing to solid economic fundamentals in place around the world as indicating this is just a downside correction in a still-bullish equities market. However, the fact of the matter is that traders/investors who entered the equities markets just a few months ago (and there are many) are now under water, or close to it. How much pain are these weak longs willing to suffer before they bail out on fear, or get washed out due to margin calls? Any analyst can pontificate about sound market fundamentals at present, but the traders and investors with skin in the game are more worried about losing their money than they are market fundamentals. In other words, trading markets is still a money game.
In overnight news, the European Union economists forecast the bloc’s GDP at up 2.3% in 2018, with inflation at 1.5%. Both of those numbers are just a bit higher than the EU’s previous forecast.
The key “outside markets” on Wednesday morning see the U.S. dollar index higher on some more safe-haven demand. Meantime, Nymex crude oil prices are weaker and trading just above $63.00 a barrel. The shaky world equity markets have prompted some selling pressure in the crude oil markets.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, consumer credit and the weekly DOE liquid energy stocks report.
Reuters
