Price pressure on gold, silver amid major U.S. stock market sell off

Over the weekend, traders and investors learned that China is seriously challenging U.S. leadership in the development of artificial intelligence. A small and relatively new Chinese company called DeepSeek has apparently produced a large language model that rivals many of the leading U.S. models–at a fraction of the cost of U.S. models. DeepSeek’s AI assistant is now the top-rated free application on Apple’s app store. The news led to a sharp sell off across global technology stocks.

Traders and investors are reconsidering capital expenditures and valuations for U.S. AI models, given the threat of cheaper Chinese AI models—ones that appear to be as good, or better, than U.S. AI versions.

Bloomberg today said: “The sudden emergence of DeepSeek calls into question the underpinnings of the rally that’s added $15 trillion to the value of Nasdaq 100 Index companies since the end of 2022.”

Reads a Barrons headline today: “DeepSeek threatens to burst AI bubble.”

Big tech companies start reporting fourth-quarter earnings this week. Profits were already expected to come in at the lowest levels in almost two years. And that was before the weekend DeepSeek news.

Asian and European shares were mostly lower overnight. U.S. stock indexes are set to open sharply lower when the New York day session begins.

In other overnight news, China’s economy entered 2025 on a weak note, prompting its central bank to inject record cash into China’s financial system this month. China’s non-Manufacturing purchasing managers index (PMI) came in below market expectations and below last month’s reading. The Manufacturing PMI also fell back into contraction territory.

President Donald Trump threatened and then quickly pulled U.S. tariffs on Colombia after the two countries reached a deal on deported migrants.

The U.S. data point of the week sees the Federal Reserve widely expected to hold U.S. interest rates steady at the FOMC meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Jerome Powell.

The key outside markets today see the U.S. dollar index lower and hitting a five-week low. Nymex crude oil futures prices are weaker and trading around $74.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.512%.

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

Technically, February 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 above solid resistance at the contract high of $2,826.30. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,700.00. First resistance is seen at the overnight high of $2,778.10 and then at last week’s high of $2,794.80. First support is seen at the overnight low of $2,752.00 and then at $2,741.00.

March silver futures bulls have the slight overall near-term technical advantage. Prices are trending up on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at $31.00 and then at $31.50. Next support is seen at last week’s low of $30.465 and then at $30.115.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com