Price pressure on gold, silver on reports Russia may negotiate

(Kitco News, Fri. Feb. 25th, 2022) – Gold and silver prices are sharply lower in early U.S. trading Friday, on recent breaking news that Russia may be willing to sit down and talk, namely with China, on de-escalating the Russia-Ukraine war that began this week. The situation is still very fluid, but the metals markets will likely continue reacting to the latest news headlines on the matter. Gold hit a 1.5-year high and silver a seven-month high on Thursday. April gold futures were last down $29.60 at $1,896.80 and March Comex silver was last down $0.517 at $24.165 an ounce.

The Russia-Ukraine war continues on the front burner of the marketplace to end the trading week. There is still risk aversion in the marketplace. However, it can be argued that marketplace anxiety is not as high as it was early Thursday, amid the reports Russia may negotiate. Also, U.S. and western country sanctions against Russia are being deemed not as severe as expected, including no sanctions on Russian crude oil or natural gas industries. Also, President Biden reiterated Thursday that the U.S. has no plans to get the world’s most powerful military involved in the Russia-Ukraine war. In other words, the major economies of the world will stand by and watch the war unfold, with the likely outcome a complete Russian takeover of Ukraine. As the marketplace continues to digest this matter, a main worry remains a mistake made by either Russia or NATO that would suck the West into the conflagration.

Some of the markets that had initial extreme price movements have retraced much of those price moves, including U.S. stock indexes, gold, grains and U.S. Treasuries. Gold is the most notable example. The safe-haven metal rallied to a 1.5-year high of $1,976.50 early Thursday, but has dropped sharply since then and is presently trading just above $1,900.00. Some gold traders fear that Russian President Putin may have to sell some or much of his vast gold reserves to support the depreciating Russian currency, the ruble. Russia’s stock market also tanked Thursday, at one point losing half its value, before rebounding. Bitcoin and the other cryptocurrencies have stabilized Friday, after suffering initial losses at the start of Russia’s invasion of Ukraine.

Gold price is not reacting to war in Europe, here’s the real reason it moved up – Alain Corbani

Still, commodity market traders realize Russia and Ukraine are major producers and world suppliers of many major raw commodities, including metals and grains. A Dow Jones Newswires headline this morning reads, “Ukraine war means another supply shock to global economy—the last thing it needs.” Look for many raw commodity prices to remain elevated, even if their spike highs Thursday may not be revisited.

The key outside markets today see Nymex crude oil prices posting mild losses and trading around $92.50 a barrel. The U.S. dollar index is a bit higher after hitting a 1.5-year high Thursday. The benchmark U.S. 10-year Treasury note is presently yielding 1.95%.

U.S. economic data due for release Friday includes personal income and outlays, durable goods orders, the pending home sales index, and the University of Michigan consumer sentiment survey.

Technically, the April gold futures bulls have the solid overall near-term technical advantage but appear exhausted and in need of a price pause. Prices are still trending up on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above major resistance at this week’s high of $1,976.50. 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 $1,925.00 and then at $1,950.00. First support is seen at this week’s low of $1,878.60 and then at $1,856.70.

March silver futures bulls have the firm overall near-term technical advantage but appear tired and in need of a price pause. Prices are in an uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at this week’s high of $25.67 an ounce. The next downside price objective for the bears is closing prices below solid support at this week’s low of $23.71. First resistance is seen at the overnight high of $24.525 and then at $24.755. Next support is seen at $24.00 and then at this week’s low of $23.71

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com