Gold and silver posting sharp price declines, following equities

New York (Jan 22)  Gold and silver futures prices are trading sharply lower in early U.S. trading Friday. As has been the case in the recent past, the safe-haven metals bulls are confounded by their markets’ inability to perform on the upside at the same time the U.S. stock market is posting solid losses. The key outside markets are in a bearish daily posture for the metals markets today, as the U.S. dollar index is firmer and crude oil prices are solidly lower. February gold futures were last down $25.20 at $1,841.00 and March Comex silver was last down $0.664 at $25.19 an ounce.

Gold and silver bulls do not want to see technically bearish weekly low closes on a Friday, which would then suggest follow-through selling pressure early next week. At present, this is a possibility.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings and are seeing routine profit taking heading into the weekend, after hitting new record highs on Thursday. It could be that trader and investor enthusiasm was dented by the new Biden administration’s focus on the still-raging pandemic in the U.S. and other parts of the world. President Biden said Thursday that in the coming weeks the U.S. death toll could surpass half a million. The government’s chief virus expert, Dr. Anthony Fauci, said at a White House press conference on Thursday that the U.S. could begin to get back to normal by the fall, which reminded the marketplace that despite vaccines rolling out there will still be some rocky months ahead, both on a human and economic toll basis.

In overnight news, the Euro zone got some downbeat economic news, as the Markit composite purchasing managers’ index (PMI)fell to 47.5 in January from 49.1 in December. A reading below 50.0 suggests contraction in the sector. A similar report coming out of Japan also dented bullish attitudes in Asia overnight. “A double-dip” recession in the Euro zone is looking increasingly inevitable, said one European market analyst.

The key “outside markets” today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil futures prices are solidly lower and trading around $51.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.10%.

U.S. economic data due for release Friday includes the U.S. flash manufacturing PMI, the services PMI, existing home sales and the weekly DOE liquid energy stocks report.

Technically, the February gold futures bulls and bears are back on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,800.80. First resistance is seen at $1,850.00 and then at $1,858.00. First support is seen at $1,831.10 and then at $1,817.10.


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