Gold and Precious Metals

Strong price gains for gold, silver on safe-haven demand

(Kitco News) – Gold and silver prices are sharply up in early U.S. trading Friday, on safe-haven buying following news of U.S.-British air strikes against rebels in Yemen. February gold was last up $35.30 at $2,054.50. March silver was last up $0.52 at $23.225.

Risk aversion is keen late this week as the U.S. and U.K. militaries bombed more than a dozen military sites used by the Iranian-backed Houthis in Yemen Friday. It was a retaliatory strike using warship and submarine-launched missiles and fighter jets, U.S. officials said. Yemen’s rebel Houthis said the airstrikes killed at least five people. Gold prices spiked sharply higher on the news, while crude oil prices pushed sharply higher. The Red Sea Houthi attacks on shipping vessels have impacted global commerce. Tesla announced it is halting production of its automobiles at a German factory due to supply chain disruptions.

Asian and European stock markets were mostly lower overnight. U.S. stock index futures are set to open slightly weaker when the New York day session begins.

Meantime, China got some more dour economic news Friday as the world’s second-largest economy is sinking deeper into deflation, “spelling trouble for the whole world as demand falters,” reported Dow Jones Newswires today. China’s December consumer price index fell 0.3%, year-on-year. Meantime, China’s December exports were up 2.3%, year-on-year, while imports were up 0.2%. Those numbers were slightly better than expected. China reported its 2023 exports fell 3.6% on the year, while imports dropped 5.5% in the same period.

Following Thursday’s slightly higher-than-expected U.S. consumer price index report for December, today comes the U.S. producer price index report for December. The PPI is forecast up 0.1% from November versus an unchanged reading in November from October. The Federal Reserve has been generally pleased with cooling U.S. inflation—to the point of hinting of no more interest rate increases and possibly interest rate cuts in 2024. The Fed would like to see annual U.S. inflation rates of around 2%.

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are solidly up and trading around $74.50 a barrel. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 3.986%.

Other U.S. economic data due out Friday includes the USDA monthly supply and demand and quarterly grain stocks reports.

Technically, the gold futures bulls have the overall near-term technical advantage and regained some momentum today. Prices are in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,058.70 and then at $2,071.10. First support is seen at $2,040.00 and then at the overnight low of $2,033.10. Wyckoff’s Market Rating: 7.0.

The silver bears have the overall near-term technical advantage. Prices are in a choppy, four-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the November low of $22.26. First resistance is seen at this week’s high of $23.565 and then at $23.715. Next support is seen at this week’s low of $22.63 and then at the November low of $22.26. Wyckoff’s Market Rating: 4.0.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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