Gold pressured by rising bond yields, shorter-term futures bears

(Kitco News) - Gold futures prices are solidly lower in midday U.S. trading Thursday. Rising government bond yields are at least short-term bearish for the precious metals markets as the benchmark U.S. Treasury note is presently yielding 1.45%, which is a one-year high. The shorter-term, chart based futures trader bears are also having their way with the gold market at present, taking advantage of a near-term price downtrend in place. Silver is faring better as the metal still sees a near-term price uptrend in place and the silver bulls are much more resilient recently. April gold futures were last down $21.40 at $1,776.80 and March Comex silver was last down $0.169 at $27.69 an ounce.

U.S. data out this morning did not help out the safe-haven metals. The weekly jobless claims report showed a sharp drop in claims in the latest reporting week, dropping by 111,000 to 730,000. While these number are nowhere near the levels seen pre-pandemic, they do suggest the U.S. jobs market is stabilizing after winter-time layoffs. U.S. GDP in the fourth quarter was reported at up 4.1%, year-on-year and durable goods orders rose 3.4% in January—also suggesting a rebounding U.S. economy.

Global stock markets were mostly higher overnight. U.S. stock indexes are solidly lower at midday today, also pressured by rising bond yields. The discussion in the marketplace at present centers on global inflation prospects, with most traders reckoning inflation is up-ticking. The key question is how high will price inflation rise and will it become problematic. Government bond yields are trending up. Stock market bulls have taken note of the rising bond yields and are a bit worried about it. At least one big Wall Street investment bank is predicting a “commodity super-cycle” is just under way that will see raw commodity prices appreciate for quite some time to come. Many commodity futures markets such as the grains, crude oil and some softs have seen their prices hit multi-month and even multi-year highs this year.

The key “outside markets” today see Nymex crude oil futures prices slightly up and trading around $63.45 a barrel. The U.S. dollar index is lower today as the bulls have faded recently.

Technically, the February gold futures bears have the firm overall near-term technical advantage amid a six-week-old price downtrend in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,815.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,759.00. First resistance is seen at $1,800.00 and then at today’s high of $1,805.00. First support is seen at today’s low of $1,768.10 and then at $1,759.00. Wyckoff's Market Rating: 3.0

March silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the February high of $30.35 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at today’s high of $28.265 and then at this week’s high of $28.425. Next support is seen at this week’s low of $27.33 and then at $27.00. Wyckoff's Market Rating: 6.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com