(Kitco News) – Gold prices are slightly down in early U.S. futures trading Wednesday, and saw a mild corrective bounce overnight erased by a strong U.S. economic report just released. The safe-haven metals continue to be squelched by strong rallies in global stock markets this week, led by the U.S. stock indexes that are at or near record highs again. February gold futures were last down $0.70 an ounce at 1,555.10. March Comex silver prices were last up $0.014 at $17.575 an ounce.
The just-released ADP national employment report for January came in at up 291,000, which was much higher than the forecast rise of 150,000. This report is a precursor to Friday morning’s more important jobs report from the Labor Department. Non-farm payrolls in that report are forecast at up around 160,000 in January. However, today’s strong ADP number has many now thinking Friday’s non-farm jobs number will be solid, too.
Global stock markets are in full rally mode at mid-week, as Asian and European shares pushed higher as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. The marketplace is reacting to the rate of spread of the illnesses slowing down, even though total numbers of those afflicted is rising. There are also reports that a drug is being developed to counteract the virus. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins and are at or near their record highs. As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak.
The marketplace this week sees it as especially encouraging that China’s central bank stepped in an provided significant liquidity to China’s financial system, specifically by reducing short-term lending rates with the influx of funding. The effort was in response to the coronavirus outbreak’s negative impact on China’s businesses.
U.S. stock market traders this week are buzzing about the stock price of Tesla, which has soared around 50% since the beginning of January. Some pessimistic stock market watchers are calling Tesla’s move a euphoria that can signal the top in a stock market rally.
The key outside markets today see crude oil prices higher and trading around $50.75 a barrel. Meantime, the U.S. dollar index is firmer.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the U.S. services PMI, the global services PMI, the weekly DOE liquid energy stocks report, and the ISM non-manufacturing report on business.
Technically, the gold bulls still have the overall near-term technical advantage but have faded and need to show fresh power soon to keep their chart edge. A nearly three-month-old price uptrend is still in place on the daily chart, but is in some jeopardy. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,600.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,550.00. First resistance is seen at the overnight high of $1,566.20 and then at $1,570.00. First support is seen at the overnight low of $1,551.10 and then at $1,542.80. Wyckoff’s Market Rating: 6.0
March silver futures bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. However, a downtrend line is now in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at Tuesday’s high of $17.77 and then at $18.00. Next support is seen at the overnight low of $17.465 and then at the January low of $17.28. Wyckoff’s Market Rating: 5.0.
By Jim Wyckoff
For Kitco News
Contact jwyckoff@kitco.com
www.kitco.com
