Gold price sees some price pressure despite keen risk aversion

London (Dec 21)  Gold futures prices modestly lower in early U.S. trading Monday after hitting a six-week high in overnight action. Silver prices are seeing good gains and hit a three-month high overnight. Price action to start the trading week is volatile amid a stronger “risk-off” trader and investor mentality as Covid-19 concerns are back on the marketplace front burner and at a full boil. Don’t be surprised to see traders step in and buy the dip in gold. February gold futures were last down $2.20 at $1,886.90 and March Comex silver was last up $0.482 at $26.51 an ounce.

Global stock markets were down overnight. U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. The market place has shuddered to start the holiday-shortened trading week, on news of a new and more easily transmissible strain of Covid-19 that has been detected and is spreading rapidly in the U.K. European countries have quickly banned travel to and from Britain. The news comes just as the world was beginning to breathe a bit of a sigh of relief because of the rapid deployment of vaccines for Covid-19. This new strain of Covid has overshadowed the weekend agreement between U.S. congressional Democrats and Republicans on a new $900 billion financial aid package for Americans.

Further disrupting the marketplace to start the trading week is the failure of the U.K. and the European Union to reach a smooth Brexit agreement and missing a weekend deadline for such to happen.

The U.S. dollar index is sharply higher Monday on safe-haven demand and a rebound after hitting a 2.5-year low last week. The other important outside market sees February Nymex crude oil futures prices sharply lower and trading around $47.00 a barrel. These two key outside markets are in a fully bearish daily posture for the precious metals markets. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.91%.

U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.

Technically, the February gold futures bulls have the overall near-term technical advantage amid a fledgling price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the November high of $1,973.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,820.00. First resistance is seen at $1,900.00 and then at the overnight high of $1,912.00. First support is seen at $1,875.00 and then at the overnight low of $1,859.00.

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