Gold and silver price gains on short covering, mkts out friendly

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(Kitco News) – Gold and silver prices rose in early US trading on Friday, against the backdrop of short coverage in the futures markets after the recent selling pressure, and amid support from the low US dollar index and the decline in US Treasury yields on this day. April gold was last up $11.60 at $1,851.90, and May silver was up $0.274 at $21.17.

Global stock markets were steadier overnight. US stock indices are pointing to firmer openings when the daily New York session begins. US stock indices are in downtrends created by the prices on the daily bar charts.

The general market has recently been dealing with the realization that problematic global inflation is likely to continue for much longer than traders and investors initially anticipated or hoped. This notion has been satiating the risk appetite of traders and investors lately. A headline in the Wall Street Journal today read: “The global economy is doing well. This is bad news for central bankers.”

In the evening news, the Chinese central bank governor indicated that the bank will ease its monetary policy by lowering the bank reserve ratio in order to support the Chinese economy.

Meanwhile, the Eurozone received some mixed inflation news as the PPI fell 2.8% in January but rose 15.0% year-on-year. These numbers were less hot than expected.

This morning the major foreign markets are seeing weakness in the US Dollar Index. NYMEX Crude Oil futures prices are down slightly and are trading around $78.00 a barrel. The yield on the 10-year US Treasury note is currently yielding 4.007%.

US economic data due for release on Friday includes the US Services Purchasing Managers’ Index (PMI), the ISM Business Services report, and the Global Services PMI.

Technically, the bulls and bears in gold futures have returned to level the general technical playing field in the near term. The downtrend on the daily bar chart has been invalidated. The next upside price target for the bulls is to achieve a close in the April futures contract above the strong resistance at $1,900.00. The bears’ next bearish price target in the near term is pushing futures prices below the strong technical support level at $1,800.00. We notice the first resistance at last week’s high at $1,856.40 and then at $1,870.00. The first support is seen at the overnight low of $1,842.00 and then at $1,825.00. Wyckoff Market Rating: 5.0.

The Silver Bears have the overall technical advantage in the near term. The prices are in a sharp downtrend on the daily bar chart. The next upside price target for the silver bulls is for the May futures price to close above the strong technical resistance at $22.25. The next downtrend price target for the bears is to close the price below the strong support level at $19.00. We notice the first resistance at this week’s high of $21.285 and then $21.52. The next support is seen at Thursday’s low of $20.76 and then this week’s low of $20.505. Wyckoff Market Rating: 4.0.