Corrective price pullbacks in gold, silver; geopolitics remain in play

(Kitco News) – Gold and silver prices are lower in early U.S. trading Wednesday. Downside corrections are featured at mid-week after recent solid gains. Gold prices hit an eight-month high Tuesday and silver a four-week high. Risk aversion has receded just a bit, for now. April gold futures were last down $8.70 at $1,898.70 and March Comex silver was last down $0.146 at $24.16 an ounce.

On the front burner of the marketplace remains the Russian incursion into Ukraine. The U.S. and other nations have slapped sanctions on Russia, but it appears the West has no intention of military action against Russia. That has somewhat assuaged the marketplace, for now. It’s still a dicey situation, as a military mistake by either side could significantly escalate the conflict. The major question on traders’ and investors’ minds is whether the uncertainty/anxiety factor has peaked, from a markets perspective. Remember that markets many times overreact to major geopolitical events in the early stages of those events. Traders tend to factor into market prices a worst-case scenario, only to see that scenario typically not occur. Still, in this particular geopolitical situation another major “shoe could drop,” such as a full-blown Russia invasion of Ukraine, to further destabilize markets.

Global stock markets were mostly firmer overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins. The S&P 500 stock index is being termed in “correction” territory, meaning a 10% decline from its recent record high.

In overnight news, the Euro zone consumer price index for January came in at up 0.3% from December and up 5.1%, year-on-year. Those numbers were right in line with market expectations.

Watch palladium, gold, and silver prices as West sanctions Russia in response to Ukraine crisis

The key outside markets today see Nymex crude oil prices weaker and trading around $91.50 a barrel. The U.S. dollar index is a bit weaker early today. The benchmark U.S. 10-year Treasury note is presently yielding 1.977%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, and the weekly Johnson Redbook and chain store sales indexes.

Technically, the April gold futures bulls have the solid overall near-term technical advantage. Prices are trending up on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the May 2021 high of $1,922.40. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at the overnight high of $1,903.20 and then at Tuesday’s high of $1,918.30. First support is seen at Tuesday’s low of $1,889.70 and then at $1,882.50.

March silver futures bulls have the overall near-term technical advantage and are working on a price uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the January high of $24.755 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.50. First resistance is seen at Tuesday’s high of $24.325 and then at $24.50. Next support is seen at $24.00 and then at Tuesday’s low of $23.71.

Posted by :

Jack Dempsey, President

401 Gold Consultants LLC
jdemp2003@gmail.com