Gold Loses Early Gains As U.S. Stocks Coming Off Overnight Lows

Editor’s Note: The article was updated to reflect a drop in price ahead of the North American equity open.

(Kitco News) – Gold prices are near steady in early U.S. trading Monday, and lost their moderate overnight gains that came on some safe-haven buying interest when world stock markets started out the trading week in a sell off following some very weak economic data coming out of China. The near-term technical postures for gold and silver remain bullish, which continue to invite chart-based speculative buyers. February gold futureswere last up $0.10 an ounce at $1,289.70. March Comex silver was down $0.026 at $15.63 an ounce.

European and Asian stock markets were lower overnight, while U.S. stock indexes are also pointed down when the New York day session begins.

There is keener risk aversion in the market place to start the trading week, following some very downbeat economic news coming out of China. China’s exports in December were down a surprising 4.4%, year-on-year. Exports were up 5.4% in November. China’s imports fell 7.6% in the same period. In past months both imports and exports saw double-digit gains. The trade war with the U.S. has really hurt China’s economy, the latest import and export numbers suggest. Such will likely embolden the U.S. is its trade posture against China. Last week the two sides met in Beijing and are scheduled to meet next in the U.S.

There was also dour economic news coming out of the European Union Monday. The Euro zone’s factory output dropped 1.7% in November from October, for the largest monthly drop in three years. The reading was down 3.3%, year-on-year, for the biggest drop in six years.

In other overnight news, Newmont Mining and Goldcorp reported the two companies plan to combine to create the world’s largest gold miner.

Brexit is back in the minds of traders and investors in Europe. Voters in the U.K. on Tuesday are likely to reject Prime Minister May’s latest Brexit plan, putting the entire Brexit situation into serious turmoil.

The U.S. government partial shutdown is now the longest on record. The matter is not a serious drag on the marketplace, but many markets are lacking normal economic reports to drive their daily price action, which is causing uncertainty and some anxiety amid the dearth of news, which is generally bearish for those impacted markets.

The important outside markets today see the U.S. dollar index slightly lower. The index remains in a near-term price downtrend. Meantime, Nymex crude oil prices are lower and trading just below $51.00 a barrel.

There is no major U.S. economic data due for release Monday.

Technically, the gold bulls have the overall near-term technical advantage. Prices are in a two-month-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 the January high of $1,300.40 and then at $1,310.00. First support is seen at the overnight low of $1,287.70 and then at last week’s low of $1,280.20. Wyckoff’s Market Rating: 6.5

March silver futures bulls have the overall near-term technical advantage. A two-month-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 last week’s high of $15.88 and then at the January high of $15.955. Next support is seen at last week’s low of $15.56 and then at $15.385. Wyckoff’s Market Rating: 6.0.

By Jim Wyckoff
For Kitco News


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