Gold, silver gain as bears appear near-term exhausted

(Kitco News) - Gold and silver futures prices are higher and near their daily highs in midday U.S. trading and made strong recoveries after both markets hit multi-week lows overnight. The big rebounds suggest the bears are near-term exhausted and that today’s lows could be near-term market bottoms. However, more price strength is needed this week to better suggest such. Bullish “outside markets” also worked in favor of the precious metals bulls Tuesday—a lower U.S. dollar index and higher crude oil prices. February gold futures were last up $9.80 at $1,839.70 and March Comex silver was last up $0.424 at $25.295 an ounce.

The feature in U.S. trading Tuesday was former Federal Reserve Chair and incoming U.S. Treasury Secretary Janet Yellen testifying before a U.S. Senate finance committee. As expected, she espoused a “go big” approach on U.S. government programs to repair the economic damage caused by the pandemic. The gold and silver markets did move to close to their daily highs as Yellen’s remarks hit the newswires. Last week President Biden announced a $1.9 trillion government spending and assistance plan.

Global stock markets were mostly higher overnight. U.S. stock indexes are also higher at midday. Traders and investors are more upbeat to start the U.S. trading week, following the three-day holiday weekend. Market participants may become more cautious heading into the transition of U.S. power at midday Wednesday, amid high security in Washington, D.C. and at other state capitals around the country. Also, the U.S. just surpassed 400,000 Covid-19 deaths—the most in the world—and there are new concerns about the virus mutating. Those concerns are presently being offset by the vaccines that continue to roll out, albeit after a rocky start in the U.S.

The key “outside markets” today see the U.S. dollar index lower at midday following the recent good rebound from a 2.5-year low scored earlier this month. Meantime, Nymex crude oil futures prices are firmer and are trading around $53.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.12%.

There was no major U.S. economic data released Tuesday.

Technically, more price gains this week would signal a near-term market bottom is in place. Right now the gold bulls and bears are still on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at today’s low of $1,800.80. First resistance is seen at today’s high of $1,845.00 and then at last week’s high of $1,864.00. First support is seen at $1,825.00 and then at last week’s low of $1,817.10. Wyckoff's Market Rating: 5.0.

March silver futures prices hit a five-week low early on and today’s high-range close suggests the bears are now exhausted. More price gains this week would signal a near-term market bottom is in place. Right now the silver bulls and bears are still on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at the January high of $29.105 an ounce. The next downside price objective for the bears is closing prices below solid support at today’s low of $24.04. First resistance is seen at today’s high of $25.48 and then at $26.00. Next support is seen at $25.00 and then at $24.365. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com