(Kitco News) – Gold prices are moderately higher in early-afternoon U.S. trading Wednesday. The safe-haven metal erased modest overnight losses as the U.S. dollar index resumed its recent downtrend and fell to a 2.5-month low. A surging crude oil market also supported the metals market bulls today. Gains in the precious metals were limited today as global equity markets are still in rally mode. February gold futures were last up $5.50 an ounce at $1,291.40. March Comex silver was up $0.007 at $15.715 an ounce.
The key outside markets today see the U.S. dollar index down amid notions of a more dovish Federal Reserve. The USDX has been trending sideways to lower on the daily chart for three weeks. Meantime, Nymex crude oil prices are solidly higher and trading well above the key $50.00 a barrel level. There are chart clues the oil market has bottomed out, including prices pushing back above the important psychological level of $50.00.
European, Asian and U.S. stock markets were higher today, with U.S. stock indexes hitting three-week highs, as investors are in a good mood so far this week as reports continue to be positive on the U.S.-China trade talks that just concluded in Beijing. “Talks with China are going very well,” President Trump tweeted Tuesday.
The marketplace is awaiting this afternoon’s release of the minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC). Traders will parse the report for clues on the direction and timing of Fed policy in the coming year.
St. Louis Federal Reserve President James Bullard overnight said the Fed should refrain from raising interest rates for fear of bringing on a U.S. recession. Bullard is a voting member of the FOMC.
The U.S. government shutdown is into its third week, but the matter is currently not a front-burner issue for markets. President Trump addressed U.S. citizens in a speech on the matter Tuesday evening, and leading Democrats countered.
Technically, the gold bulls have the overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,300.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,260.00. First resistance is seen at today’s high of $1,293.00 and then at this week’s high of $1,297.00. First support is seen at last week’s low of $1,278.10 and then at $1,275.00. Wyckoff’s Market Rating: 6.5
March silver futures bulls have the overall near-term technical advantage. A seven-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at this week’s high of $15.88 and then at last week’s high of $15.955. Next support is seen $15.50 and then at $15.385. Wyckoff’s Market Rating: 6.0.
By Jim Wyckoff
For Kitco News