Bearish price action in gold, silver, after Monday’s frenzy

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(Kitco News) – Gold and silver futures prices are trading lower in early trading Tuesday in the United States, with silver leading the way. It seems that the attempted short contraction in the silver market has failed, at least at this time. The rally in global equity markets earlier this week is a bearish element for safe haven metals. April gold futures were down $ 19.70 to $ 1,844.00 for the last time, and March silver on Comex was down $ 1,718 to $ 27.72 an ounce.

Silver’s big pullback from Monday’s eight-year high of $ 30.35 in March silver futures suggests that efforts by retail traders to produce a small contraction have failed, at least for now. The big jump in silver futures caught the attention of the Commodity Futures Trading Commission (CFTC), and acting chairman Rostin Behnam said the futures regulator is “closely monitoring” activity. “The Commission is communicating with other regulators, exchanges and stakeholders to address any potential threats to the integrity of the silver derivatives markets and remains vigilant in monitoring these markets for fraud and manipulation,” it stated . The Comex did raise trading margins on silver futures this week.

Global equity markets were mostly firmer overnight. US stock indices are aiming for higher openings when the New York day session begins and have recovered solidly after recent declines. Traders and investors are more optimistic this week with the news that the Covid-19 pandemic, while still affecting many countries, shows some signs of peaking in the US and Europe as vaccines they continue to be distributed to populations, but not without some serious bottlenecks. Additionally, the market’s attention is on a new pandemic aid package that will likely be approved by the US Congress in the coming weeks. It also appears that the GameStop and “Redditor” business saga has calmed down, at least for now, as the market focuses again on corporate earnings reports and upcoming economic data including the US Labor Situation Report from Friday.

In other overnight news, the euro zone economy contracted 0.7% in the fourth quarter and contracted 5.1% year-on-year. However, those numbers were slightly better than expected.

Key “outside markets” today see the US dollar index higher and hit a seven-week high overnight. Importantly, USDX is now trending short-term uptrend and some of the major currency futures markets are now in nascent short-term price downtrends, while others have at least seen their uptrends stall. Meanwhile, Nymex crude oil futures prices are solidly higher, peaking over 12 months overnight and trading around $ 55.00 a barrel. The yield on the benchmark 10-year US Treasury bond stands at 1.10%.

US economic data to be released on Tuesday includes the Goldman Sachs and Johnson Redbook weekly retail sales reports, the ISM New York business report, the BID / TIPP Economic Optimism Index and domestic auto industry sales.

Technically, the bulls and bears in February gold futures are back on a playing field of level short-term technical advantage amid recent choppy trading. The Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $ 1,900.00. The bears’ next short-term downside price objective is pushing futures prices below solid technical support at the January low of $ 1,804.70. The first resistance is seen at the overnight high of $ 1,866.30 and then at last week’s high of $ 1,878.90. The first support is seen at the overnight low of $ 1,840.00 and then at last week’s low of $ 1,832.40. Wyckoff Market Rating: 5.0

The March silver futures bulls have the firm general technical advantage in the short term, but may now be exhausted in the short term. The next bullish price objective for silver bulls is price close above solid technical resistance at this week’s high of $ 30.35 an ounce. The next downside price objective for the bears is the closing prices below the solid support at $ 26.00. The first resistance is seen at $ 28.00 and then $ 28.50. The next support is seen at the overnight low of $ 27.28 and then $ 27.00. Wyckoff Market Rating: 7.0.