Sharp price declines in gold, silver amid stronger USDX, rising returns

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(Kitco News) – Gold and silver futures prices are sharply lower and close to their session lows in early US trading on Wednesday. Rising government bond yields and a downturn in the US dollar index by the middle of the week are negative outside forces operating against the precious metals markets. The importance of buying in safe-haven metals has also recently been limited by the rise in stock markets and a surge in the US dollar index. And then there is the shorter term, based on term based futures traders, which is accumulating due to the more bearish short term technical attitudes in gold and silver. Gold futures in April last fell $ 24.10 at $ 1,710.00 and May Comex silver last $ 0.649 lower at $ 26,255 ounces.

The US data point of the day is the newly released ADP National Employment Report for February, with an increase of 117,000, which was a major drawback to the expected increase of 225,000 jobs, and can be compared to a 174,000 gain in January. The metal markets continued to sell as a result of the data, although it had to support prices. This report is a precursor to the U.S. Department of Labor’s report on Friday morning – arguably the most important U.S. economic report of the month.

Global stock markets rose mostly overnight. US stock indices point to higher openings when the day begins in New York. Market sentiment is optimistic by the middle of the week after President Biden said on Tuesday that all Americans who want a vaccine against Covid should be able to get it by May. The US government is also getting closer to rolling out its latest pandemic aid package totaling $ 1.9 billion. “We can see light at the end of the tunnel of the pandemic,” said one market analyst. The safe harbor metals get no support from the above concepts.

In the overnight news, the Eurozone Services Purchasing Managers’ Index (PMI) rose 45.7 in February compared to 45.4 in January. A reading below 50.0 indicates contraction in the sector.

Traders and investors are still watching the yields on government bonds, which have been rising in general in recent times and which have sometimes made stock markets slightly shaky. The U.S. Treasury note currently trades at about 1,446% for its returns. Many veteran market viewers believe that U.S. treasury yields will rise in the coming months.

The most important “outside markets” are that Nymex’s prices for crude oil futures are higher and trade at around $ 61.85 per barrel. There is an OPEC meeting on Thursday that will closely monitor the market. It could be that oil prices, with oil prices above $ 60 a barrel, are opening up a bit more, after production has been limited to increase prices over the past few months. The US dollar index is a bit firmer today.

US economic data to be released on Wednesday includes the weekly survey for MBA bond applications, the national ADP report on employment, the US Index of Purchasing Service Managers (PMI), the ISM report on business services, the global services PMI, the Federal Reserve’s beige book and the weekly DOE liquid energy supplies.

Technically, the gold futures in April have the good short-term technical advantage amid a two-month-old downward price on the daily chart. The Bulls’ next upward price target is to end futures contracts in April above solid resistance at the high of $ 1,757.40. Bears’ next short-term downward price target is to bring futures contract prices below $ 1,700.00. The first resistance is seen at $ 1,725.00 and then at $ 1,739.10 today. The first support is seen at the lowest of $ 1,704.60 and then at $ 1,700.00. Wyckoff’s Market Rating: 2.5

Silver futures bulls may have the overall technical advantage in the short term, but they must soon show fresh strength to retain it. The next upward price target for Silver Bulls is closing prices above solid technical resistance at last week’s high of $ 28.47 per ounce. The next downside price target for the bears is to close prices below a solid support of $ 25.00. First resistance is seen at the overnight high of $ 26,915 and then at this week’s high of $ 27,175. The next support is seen at $ 26.00 and then at the low of $ 25.82 this week. Wyckoff’s Market Rating: 5.5.