(Kitco News) – A sign of a strong market is when prices see a corrective pullback in an uptrend, as traders step in do to some bargain hunting and “buy the dip.” Such is the case with the gold and silver markets late this week. Prices are moderately higher in early U.S. trading Friday morning. The gains in the precious metals come despite a resurgent U.S. dollar index that hit a five-week high overnight. April gold futures were last up $4.10 an ounce at $1,318.30. March Comex silver was last up $0.122 at $15.835 an ounce.
European and Asian stock markets were mixed overnight. It’s been a quieter trading week this week, what with Chinese markets and some other Asian markets closed for the Lunar New Year holiday. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Underlying themes still in play for the markets include perceptions of slowing world economic growth, with maybe the U.S. being the outlier after its strong jobs growth reported last Friday. European Union and Chinese economic reports lately have been mostly downbeat. The other matter on the front burner for traders and investors is the U.S.-China trade war, which sees a March 1 deadline for either getting a resolution on the matter, or ratcheting up of sanctions between the world’s two largest economies.
A feature in the marketplace this week is the rallying U.S. dollar. Raw commodity market bulls, including the metals bulls, don’t want to see a strong greenback because it makes those commodities priced in U.S. dollars on the world market more expensive to purchase in non-U.S. currency.
The other key outside market today sees Nymex crude oil prices slightly weaker trading around $52.50 a barrel. Prices have backed down from this week’s 2.5-month high of $55.75 a barrel.
The only major U.S. economic reports due for release Friday are a slew of USDA reports backed up from the government shutdown.
Technically, the April gold bulls still have the overall near-term technical advantage. Prices are still in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the January high of $1,331.10. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,323.60 and then at $1,331.10. First support is seen at the overnight low of $1,311.50 and then at this week’s low of $1,306.40. Wyckoff’s Market Rating: 6.5
March silver futures bulls have the near-term technical advantage. A 2.5-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 $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.50. First resistance is seen at this week’s high of $15.935 and then at $16.00. Next support is seen at this week’s low of $15.635 and then at $15.50. Wyckoff’s Market Rating: 6.0.
By Jim Wyckoff
For Kitco News