Gold, Silver Prices Up On Weaker USDX, Dovish Fed Talk

(Kitco News) - Gold and silver futures prices are up and near their daily highs in early-afternoon U.S. trading Monday, supported in part by a weaker U.S. dollar index, another sell off in the U.S. stock market, and rhetoric supporting a more dovish U.S. monetary policy. February gold futures were last up $10.20 an ounce at $1,251.60. March Comex silver was up $0.123 at $14.76 an ounce.

The gold and silver markets pushed to their daily highs just before midday, at the same time well-known bond trader and fund manager Jeff Gundlach predicted the U.S. dollar would struggle in the coming new year, and that U.S. equities will enter a bear market. That was music to the bullish metals market traders’ ears. The small-cap Russell 2000 stock index has entered bear market territory—down 20% from its high this year.

There were also some commentaries in the press today and over the weekend from well- known traders and analysts, and even President Trump and his advisor, calling for the Fed to back off on interest rate hikes. They are part of a growing chorus of market watchers who think the Fed has raised interest rates far enough, after what many believe what still be another U.S. rate hike this week. This dovish rhetoric is U.S. dollar-bearish and precious metals market bullish.

An eventful trading week does lie ahead. The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Also, the Chinese government holds a big economic meeting this week and could announce major new economic initiatives to stimulate the world’s second-largest economy. China’s central bank made an unexpected injection of money into its financial system on Monday.

A heavy slate of U.S. economic data is also due out late this week, including the first estimate of third-quarter gross domestic product.

The key outside markets today see the U.S. dollar index lower on what is really just a corrective pullback after hitting a nearly two-year high on Friday. Meantime, Nymex crude oil prices are lower and trading around $50.00 a barrel.

Technically, February gold futures bulls have the overall near-term technical advantage. A four-week-old price uptrend is in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,284.10. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,225.00. First resistance is seen at the December high of $1,256.60 and then at $1,260.00. First support is seen at today’s low of $1,239.40 and then at last week’s low of $1,236.50. Wyckoff's Market Rating: 6.0

March silver futures bears still have the overall near-term technical advantage. However, bulls have some momentum and are working on a four-week-old price uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at last week’s high of $14.90 and then at $15.00. Next support is seen at last week’s low of $14.56 and then at $14.28. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed down 115 points at 275.10 cents today. Prices closed nearer the session high today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 288.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the November low of 266.20 cents. First resistance is seen at last week’s high of 280.35 cents and then at 282.50 cents. First support is seen at today’s low of 271.95 cents and then at 270.00 cents. Wyckoff's Market Rating: 3.5.