More price pressure on gold, silver early, but risk aversion rising

(Kitco News, Fri. Jan. 28th, 2022) – Gold and silver futures prices lower again in early U.S. trading Friday, on some follow-through technical selling from this week’s downdraft, and amid a strong U.S. dollar index that hit another 1.5-year high overnight. Gold hit a six-week low overnight and silver a three-week low. However, there are two elements that are working in the safe-haven metals bulls’ favor at present: Gold and silver markets are both very oversold on a short-term technical basis and due for decent corrective bounces soon. Also, risk aversion has increased markedly just ahead of the open of day trading in U.S. markets. February gold futures were last down $7.90 at $1,784.90 and March Comex silver was last down $0.221 at $23.46 an ounce.

Global stock markets were mixed to lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. It’s been a wobbly week for the global stock markets. Risk aversion has receded a bit heading into the weekend. The Russia-Ukraine tensions may be easing just a bit. Meantime, the marketplace has mostly digested this week’s hawkish FOMC meeting.

In other news, the International Monetary Fund reports China’s economic imbalances have worsened. The IMF forecast China’s GDP growth at 4.8% in 2022, down from its previous forecast of 5.7% growth.

Expect ‘much higher’ commodity prices if Russia-Ukraine crisis escalates – ING

Gold and silver prices are taking it on the chin this week. Gold is down almost $70 an ounce from the early week two-month high. Silver prices are down over $2.00 an ounce from a two-month high hit last week.

The key outside markets today see crude oil prices firmer and trading around $87.20 a barrel after hitting a seven-year high on Thursday. The U.S. dollar index is higher and hit a 1.5-year high overnight. The U.S. Treasury 10-year note yield is presently fetching 1.843% and near a two-year high. For perspective, the German 10-year bond (bund) is yielding -0.046% and the 10-year U.K. gilt is at 1.248%.

U.S. economic data due for release Friday includes personal income and outlays, the employment cost index and the University of Michigan consumer sentiment survey.

Technically, the February gold futures bulls have lost their overall near-term technical advantage. A five-week-old price uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,825.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the December low of $1,753.00. First resistance is seen at today’s high of $1,798.40 and then at $1,800.00. First support is seen at the overnight low of $1,778.80 and then at $1,775.00.

March silver futures bears have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $23.50 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at the overnight high of $22.83 and then at $23.00. Next support is seen at $22.25 and then at $22.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com