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

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(Kitco News) – Gold and silver futures prices are trading sharply lower early in US trading on Tuesday, with silver leading the way. It appears that the attempt at short squeeze in the silver market has failed, at least on this point. The improving global stock markets early this week are a bearish element for the safe-haven metals. April gold futures last fell $ 19.70 at $ 1,844.00 and March Comex silver last fell $ 1,718 at $ 27.72 an ounce.

Silver’s major drop from its eight-year high at $ 30.35 on Monday in March’s silver futures suggests that retailers’ attempts to produce a short squeeze have failed – at least for the moment. The big leap in silver futures caught the attention of the Commodity Futures Trading Commission (CFTC), with acting chairman Rostin Behnam saying the futures regulator is “closely monitoring” activity. “The Commission is communicating with fellow regulators, the exchanges and stakeholders to address potential threats to the integrity of the silver derivatives markets and remains vigilant in monitoring these markets for fraud and manipulation,” he said. The Comex increased trading margins on silver futures this week.

Global stock markets tended to be firmer overnight. US stock indices point to higher gaps as the New York day session begins and have rebounded strongly from the recent declines. Traders and investors are more positive this week about the news that the Covid-19 pandemic, while still gripping many countries, is showing some signs of a spike in the US and Europe as vaccines continue to spread to the population , but not without some serious bottlenecks. Also, the market is paying attention to a new pandemic relief package that is likely to bypass the US Congress in the coming weeks. It also appears that the GameStop and “Redditor” trading saga has weakened, at least for now, as the market returns to corporate earnings reports and emerging economic data, including Friday’s US employment report.

Other nightly news: the eurozone economy contracted 0.7% in the fourth quarter and shrank 5.1% year-on-year. However, those figures were slightly better than expected.

Major “external markets” are seeing the US dollar index rise today and hit a seven-week high overnight. Importantly, the USDX is now trending higher in the short term and some of the major currency futures markets are now in flimsy short-term price declines, while others have at least seen their price hikes subside. In the meantime, Nymex crude oil futures prices are significantly higher, hitting an overnight high of more than 12 months and trading around $ 55.00 a barrel. The yield of the 10-year US Treasury bill in the benchmark is 1.10%.

US economic data released Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York business report, the IDB / TIPP index for economic optimism, and domestic sales in the auto industry .

Technically, the bulls and bears on gold futures in February are back on a short-term level playing field amid recent choppy trading. Bulls’ next upward price target is to close futures in February above a solid resistance of USD 1,900.00. Bears’ next short term downward price target is to push futures prices below solid technical support to the January low of $ 1,804.70. The first resistance is seen at the night’s high of $ 1,866.30 and then last week’s high of $ 1,878.90. Initial support is seen at the night low of $ 1,840.00 and then last week’s low of $ 1,832.40. Wyckoff’s market rating: 5.0

The March silver futures bulls have the solid overall short term technical advantage, but may now be exhausted in the short term. Silver Bulls’ next upward price target is to close prices above solid technical resistance at this week’s high of $ 30.35 an ounce. The next downward price target for the bears is to close prices below solid support at USD 26.00. The first resistance is at USD 28.00, then at USD 28.50. The next support can be seen at the night low of USD 27.28 and then at USD 27.00. Wyckoff’s market rating: 7.0.