Gold price gains amid positive outside market forces

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(Wallace Refiners) – Gold futures prices are solidly higher in early U.S. trading Monday and have rebounded after hitting an eight-month Friday. Outside market elements are working in favor of the gold market bulls to start the trading week, including lower stock markets, a weaker U.S. dollar index and firmer crude oil prices. Some short covering by the shorter-term futures traders is also featured today, given the recent losses in the gold market. April gold futures were last up $16.10 at $1,793.60 and March Comex silver was last up $0.216 at $27.47 an ounce.

Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The stock market traders are taking note of the competing asset class of government bonds, as the 10-year U.S. Treasury note yield is currently fetching 1.369%, a one-year high. Still, one stock market analyst said U.S. T-Note yields would have to rise to around 4% to become competitive with the U.S. technology stock sector, on a return on investment basis. And overall trader and investor risk sentiment remains low, as the U.S. government is set to roll out a new, big financial stimulus package for Americans. Also, Covid-19 infections are on the decline while vaccines are continuing to ramp up.

Inflation concerns in the marketplace are on the rise. Broker SP Angel said Monday morning in an email dispatch: “As the U.S., China, EU, U.K. and beyond all look to roll out their own packages of environmental initiatives, the post-crisis consumption of industrial metals is widely expected to outstrip near-term and medium-term supply. Inflation expectations have also helped base metals, with copper prices rising 18% for every 1% in consumer prices since 1992. Goldman Sachs reported last week the copper market is facing the largest deficit in a decade this year, with a high risk of scarcity over the coming months.” Many raw commodity futures market prices are trending up at present.

The marketplace is looking ahead to Federal Reserve Chairman Jay Powell’s testimony on U.S. monetary policy to the Senate Banking Committee on Tuesday.

The key “outside markets” today sees Nymex crude oil futures prices are up and trading around $59.75 a barrel. The U.S. dollar index is weaker.

U.S. economic data due for release Monday includes the Chicago Fed national activity index, leading economic indicators, and the Texas manufacturing outlook survey.

Technically, the February gold futures bears have the firm overall near-term technical advantage amid a six-week-old price downtrend in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,800.00 and then at $1,804.70. First support is seen at the overnight low of $1,778.60 and then at last week’s low of $1,759.00. Wyckoff’s Market Rating: 3.0

March silver futures bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $30.35 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at today’s high of $27.785 and then at $28.00. Next support is seen at $27.00 and then at last week’s low of $26.75. Wyckoff’s Market Rating: 6.5.