Gold treads water despite Powell's easy money stance

(Kitco News) - Gold futures prices are trading a bit lower in midday U.S. trading Tuesday and are seeing a modest downside correction after good gains Monday. Federal Reserve Chairman Jerome Powell’s remarks to U.S. lawmakers today contained no surprises and the metals markets showed little reaction. April gold futures were last down $2.40 at $1,806.00 and March Comex silver was last down $0.41 at $27.675 an ounce.

In his testimony on U.S. monetary policy to the Senate Banking Committee, Powell said the U.S. central bank is committed to a very accommodative monetary policy as long as the economy remains negatively impacted by the pandemic. “The economy is a long way from our employment and inflation goals,” he said. Powell said he expects a temporary rise in U.S. inflation, maybe over the next year, but not larger or persistent price increases, adding that he believes the big stimulus packages from the U.S. government will not cause problematic price inflation. As for rising bond yields recently, Powell said that is just “a statement of confidence” for an improving U.S. economic outlook.

A Barron’s story today was headlined, “The Reflation Trade is Well Underway. How Long Can Investors Keep Smiling?” Rising bond yields and inflation worries have thrown a scare into the stock market bulls. Still, the U.S. stock indexes are not that far down from their recent record highs and trader and investor attitudes are still generally upbeat. Global stock markets were mixed overnight, with Asian shares mostly up and European shares mostly down. U.S. stock indexes are lower at midday today.

The price of Bitcoin is getting hammered early this week and has dropped close to 15% from the record high seen over the weekend. If the declines in Bitcoin continue it could put a floor under the competing asset class, gold and silver markets.

The key “outside markets” today sees Nymex crude oil futures prices slightly down after hitting a 13-month high of $63.00 a barrel early on. The U.S. dollar index is firmer today but the bulls have faded recently. The yield on the U.S. 10-year Treasury note is presently fetching 1.37%.

Technically, April gold futures bears have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,759.00. First resistance is seen at today’s high of $1,815.20 and then at $1,820.00. First support is seen at today’s low of $1,794.50 and then at this week’s low of $1,778.60. Wyckoff's Market Rating: 3.5

March silver futures bulls have the overall near-term technical advantage amid a four-week-old price uptrend in place on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the February high of $30.25 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at $28.00 and then at today’s high of $28.425. Next support is seen at today’s low of $27.285 and then at $27.00. Wyckoff's Market Rating: 6.5.

March N.Y. copper closed up 365 points at 417.75 cents today. Prices closed nearer the session high today and hit another contract and nine-year high. The copper bulls have the strong overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 426.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 380.00 cents. First resistance is seen at today’s contract high of 322.45 cents and then at 425.00 cents. First support is seen at this week’s low of 406.65 cents and then at 400.00 cents. Wyckoff's Market Rating: 10.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com