Gold futures are down during the US session on Thursday, ccording to the Comex rating of the New York Mercantile Exchange, gold futures were traded in February at USD1792.95 an ounce at the time of writing, down 2.01%.
The session has already been traded lower than USD1790.80 per ounce. Gold may find points of support at USD1790.80 and resistance at USD1854.20.
The dollar index, which measures the performance of the greenback against a basket of six other major currencies, rose 0.88% to trade at USD97.245.
Meanwhile on Comex, silver for March fell 4.77% to trade at USD22.672 per ounce while copper for March fell 2.27% to trade at USD4.4127 per pound.
Six Federal Reserve officials warned of a rate hike soon and indicated that the March meeting could raise rates, the US Dollar Index responded as if they had announced another round of quantitative easing.
With the US dollar stalled in consolidation mode after its recent rally to the upside, gold, silver and mining stocks enjoyed pullbacks. However, since the charts provide the most accurate clues regarding future price action, technical indicators are indicating that the weakness of the US Dollar Index is short-lived.
The US dollar index ended 2021 up by 6%, gold fell by 3.5%, silver fell by about 12%, the VanEck Gold Miners ETF (NYSE:GDX) was down by about 9.5%, and the GDX ETF was down by about 9.5%. DXJ Exchange (the proxy for junior mining stocks, my primary tool for selling the precious metals sector in 2021 – I wasn’t selling gold at any point in 2021) is down about 21%.”
Just like gold, silver didn’t move to new highs in 2022 either. And it bounced off its 50-day moving average, which once again proved to be an important resistance. The outlook for silver appears to be bearish as silver looks set to fall, just like gold, especially now that we saw weakness in S&P 500 futures in trading on Tuesday before entering the market.
As a reminder, silver and mining stocks (especially small mining stocks) have traded more in line with the general stock market than gold, so if major stock indices fall, they will likely be affected the most. Since it appears that the Fed has already made a drastic shift in terms of quantitative easing and interest rates, the situation does not look good for the stock market.
And just like gold and silver, mining stocks failed to move to new highs in 2022, despite the fact that the US dollar index recently moved to new lows in 2022. They have also reacted to a small dollar rally (so far). The implications are bearish, as the US dollar index is likely to continue rising, leading to further declines in the precious metals sector.