(Kitco News) – Gold and silver futures prices are moderately lower in early U.S. trading Friday, pressured by a strong U.S. dollar index that pushed to a nearly two-year high overnight. February gold futures were last down $5.60 an ounce at $1,241.80. March Comex silver was down $0.185 at $14.67 an ounce.
The key outside markets are in a bearish posture for the precious metals early today, as the U.S. dollar index solidly higher and hit a nearly two-year high, on some safe-haven buying heading into the weekend. Meantime, Nymex crude oil prices are slightly down and trading around $52.50 a barrel.
European and Asian stock markets were mostly lower overnight, following some dour economic news out of China. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. The S&P 500 is poised to close at a new for-the-move low close today.
It appears the U.S. trade tariffs slapped on Chinese imports are significantly hurting China’s economy. November readings on industrial production were weaker than expected, while retail sales were down to the lowest level in 15 years. China’s industrial output rose 5.4% in November, year-on-year, after a rising at a rate of 5.9% in October. Retail sales were up 8.1% in November, year-on-year, following a rise of 8.6% in October. This is a negative for the metals markets, suggesting less demand coming from the world’s second-largest economy.
However, there continues to be upbeat news coming from the U.S. and China, regarding their talks on resolving their trade dispute. Reports said China has lifted tariffs on U.S. auto imports.
There was also weak economic data coming out of the European Union today. The Euro zone composite purchasing managers index (PMI) came in at 51.3 in December versus 52.7 in November. A December reading of 52.7 was expected. The weak data put pressure on the Euro currency, which in turn supported the U.S. dollar.
In other overnight news, the Russian ruble gained after Russia’s central bank slightly raised its interest rates.
U.S. economic data due for release Friday includes retail sales, industrial production and capacity utilization, manufacturing and trade inventories, and the U.S. flash and services purchasing managers indexes.
Technically, gold bulls still have the overall near-term technical advantage. Prices are in a four-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 July high of $1,284.10. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,225.00. First resistance is seen at the overnight high of $1,247.30 and then at $1,250.00. First support is seen at $1,240.00 and then at $1,236.00. Wyckoff’s Market Rating: 5.5
March silver futures bears still have the overall near-term technical advantage. However, a choppy three-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 this week’s high of $14.90 and then at $15.00. Next support is seen at this week’s low of $14.565 and then at last week’s low of $14.28. Wyckoff’s Market Rating: 3.0.
By Jim Wyckoff
For Kitco News