(Kitco News) – Gold prices are modestly up in early U.S. trading Thursday after hitting another six-month high overnight. Silver prices scored a nearly five-month high today. The gold and silver markets have backed off their overnight highs following a much-stronger-than-expected U.S. ADP national employment report. February gold futures were last up $2.70 an ounce at $1,286.70. March Comex silver was down $0.024 at $15.625 an ounce.
The December ADP national employment report came in at up 271,000, which was much higher than the consensus forecast of up 178,000. The December number was the highest growth rate in 2018. U.S. stock indexes rebounded a bit from their solid overnight losses, which in turn prompted the gold and silver markets to back down modestly from their early highs.
European and Asian stock markets were mostly down overnight. U.S. stock indexes are again pointed toward lower openings when the New York day session begins. A surprising warning from Apple about slowing sales, especially in China, helped to sink global stock indexes. The Apple news only added to worries about the major economies of the world seeing significantly slower growth rates in 2019.
Currency markets in Asia were roiled overnight, led by a big jump in the Japanese yen against the U.S. dollar. The British pound and the Canadian dollar slumped against the greenback. Other currencies also experienced higher volatility. Some market watchers blamed the downbeat Apple news, released after the U.S. stock market closed on Wednesday. Others blamed thin, post-holiday trading conditions for the currency gyrations, including Japan’s markets being closed for a holiday.
There are also lingering concerns about the U.S. government shutdown that is well into its second week.
A feature in the marketplace the first couple days of the new trading year is falling U.S. Treasury yields (rising prices). U.S. T-Bond and T-Note futures prices hit new contract highs overnight. In a surprising change of sentiment, the Fed funds futures market now shows a 90% chance the Federal Reserve will stand pat on interest rates in 2019, or even make a cut. Just a couple months ago the Fed funds futures were suggesting the marketplace reckoned by 90% odds that the Fed would raise interest rates in 2019.
The key outside markets today see the U.S. dollar index weaker on a corrective pullback from Wednesday’s solid gains. Meantime, Nymex crude oil prices are slightly lower and trading just above $46.00 a barrel, on a downside correction from good gains Wednesday.
It’s a very busy day for U.S. economic data Thursday, including the weekly MBA mortgage applications survey, the Challenger job-cuts report, the ADP national employment report, the weekly jobless claims report, the ISM New York report on business, the ISM manufacturing report on business, and domestic auto industry sales.
Traders are awaiting what is arguably the most important U.S. data point of the month: Friday morning’s employment situation report for December from the Labor Department. The key non-farm payrolls number is seen coming in at a up 176,000.
Technically, gold prices have recently pushed above the key 200-day moving average for the first time since last May. The bulls have the firm overall near-term technical advantage. Prices are in a six-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 $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 overnight high of $1,294.30 and then at $1,300.00. First support is seen at this week’s low of $1,279.70 and then at $1,275.00. Wyckoff’s Market Rating: 6.5
March silver futures bulls have the overall near-term technical advantage. A six-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 $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.75. First resistance is seen at $15.85 and then at $16.00. Next support is seen at this week’s low of $15.385 and then at $15.25. Wyckoff’s Market Rating: 6.0.
By Jim Wyckoff
For Kitco News