Gold, silver see price weakness amid bearish outside markets

Gold and silver futures prices are lower in early U.S. trading Friday, pressured in part by bearish outside market forces that include a firmer U.S. dollar index and weaker crude oil prices. However, don’t be surprised to see selling pressure wane as the session progresses, as there is still some anxiety in the marketplace at present. February gold futures were last down $5.20 at $1,846.50 and March Comex silver was last down $0.522 at $25.28 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. Selling pressure in the stock markets is being mitigated by news that President-Elect Biden will implement a $1.9 trillion stimulus plan for Americans hit by the pandemic that includes bigger stimulus payments. However, the marketplace also realizes that higher personal and corporate taxes are very likely under the Biden administration. That and lingering uncertainty ahead of the U.S. change of presidential power next week are keeping the marketplace tentative.

A feature in the markets on Thursday was Federal Reserve Chairman Jerome Powell’s speech and question-and-answer session at Princeton University. Powell said he expects a strong U.S. economic recovery beginning later in 2021, and added that inflation levels could rise. The “inflation trade” has been in the spotlight early this year, as evidenced by rallying commodity markets like the grains, crude oil, copper and others.

The key “outside markets” today see the U.S. dollar index higher, with the bulls working on producing a technically bullish weekly high close today. Meantime, Nymex crude oil futures prices are lower and are trading around $53.00 a barrel. Still, the oil bulls are enjoying a solid price uptrend in place on the daily bar chart and prices hit a 10-month high this week. The yield on the benchmark 10-year U.S. Treasury note stands at 1.107%.

It’s a busy day for U.S. economic data releases Friday, including the Empire State manufacturing survey, retail sales, the producer price index, industrial production and capacity utilization and the University of Michigan consumer sentiment survey.

Technically, the February gold futures bulls and bears are on a level overall near-term technical playing field. However, an ominous bearish pennant or flag pattern may be forming on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,962.50. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,767.20. First resistance is seen at the overnight high of $1,856.60 and then at this week’s high of $1,864.00. First support is seen at $1,835.00 and then at this week’s low of $1,817.10. Wyckoff’s Market Rating: 5.0

March silver futures bulls and bears are on a level overall near-term technical playing field. However, a bear flag pattern has formed on the daily bar chart that is ominous. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the January high of $28.105 an ounce. The next downside price objective for the bears is closing prices below solid support at the November low of $21.96. First resistance is seen at the overnight high of $25.865 and then at $26.00. Next support is seen at $25.00 and then at this week’s low of $24.365. Wyckoff’s Market Rating: 5.0.