(Kitco News) – Gold and silver futures prices are trading not too far from unchanged in early U.S. trading Tuesday. Bullish for the metals is a weakening U.S. dollar index early this week. However, bearish for the metals is a severely slumping crude oil market. February gold futures were last down $0.10 an ounce at $1,251.60. March Comex silver was down $0.039 at $14.72 an ounce.
The key outside markets today see the U.S. dollar index weaker on a further corrective pullback after hitting a nearly two-year high last Friday. Meantime, raw commodity sector leader Nymex crude oil prices are lower and hit a 15-month low of $47.84 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom.
European and Asian stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on a tepid rebound after the indexes fell to new lows for the year on Monday. The small-cap Russell 2000 index is now in bear market territory—down 20% from its high.
In overnight news, China’s President Xi Jinping gave a hawkish speech on national television Tuesday, suggesting to some that China could take a harder line with the U.S. on trade and intellectual property issues that have the world’s two largest economies at loggerheads. Others think the Xi speech as just rhetoric aimed at shoring up his own reputation among the Chinese people.
The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Most expect the FOMC to raise interest rates by 0.25% on Wednesday afternoon, at the conclusion of their meeting. The expectations for a rate hike are despite proclamations from President Trump, his closes economic advisors and noted market analysts and traders that the Fed should leave interest rates alone.
A heavy slate of U.S. economic data is also due out later this week, including the first estimate of third-quarter gross domestic product.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redook retail sales reports, new residential construction, and the FOMC meeting begins.
Technically, gold bulls have the overall near-term technical advantage. Prices are in a five-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 the December high of $1,256.60. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,220.00. First resistance is seen at the overnight high of $1,254.50 and then at $1,256.60. First support is seen at the overnight low of $1,249.00 and then at Monday’s low of $1,239.40. Wyckoff’s Market Rating: 6.0
March silver futures bears still have the overall near-term technical advantage. However, a choppy five-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 the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at last week’s high of $14.90 and then at $15.00. Next support is seen at last week’s low of $14.56 and then at $14.28. Wyckoff’s Market Rating: 3.5.
By Jim Wyckoff
For Kitco News