The trading landscape in the United States has shown relative calm during the early hours of Tuesday. As key financial data awaits release later in the week, the prices of gold and silver have experienced slight declines. Specifically, February gold has dropped by $9.30, reaching $2660.70, while March silver has seen a reduction of $0.257, settling at $30.80. The subdued atmosphere in the market can be attributed to the upcoming Federal Open Market Committee (FOMC) meeting, which convenes today and concludes Wednesday afternoon. During this pivotal meeting, Jerome Powell, the Chair of the Federal Reserve, will provide a statement and hold a press conference, outlining the future monetary policy direction.

David Morrison of Trade Nation highlighted the anticipation surrounding the upcoming interest rate announcement by the FOMC, indicating that the probability of a 25 basis point cut stands at an impressive 96%. Investors' eyes are squarely focused on the quarterly economic projections that the FOMC will present. These projections are vital as they provide insights into anticipated GDP growth, unemployment rates, inflation, and future Federal Fund rates extending into 2025 and beyond. The data will be closely scrutinized, affecting market sentiments around interest rates and the overall economy.

Gold, often viewed as a unique investment asset, has its appeal closely linked to a myriad of economic factors. The looming threat of stagflation in the United States stands out as a significant variable influencing the dynamics of the gold market. Stagflation, characterized by stagnant economic growth alongside inflation, poses a complex challenge. Should the labor market weaken, it could trigger a ripple effect, intensifying inflationary pressures and thereby constraining the Federal Reserve's room for rate cuts.

Meanwhile, the stock markets across Asia and Europe exhibited a mix of performance. As trading began on Wall Street, U.S. stock indices opened lower, reflecting the cautious mood that pervaded global markets on the day.

In another noteworthy development, a report from Bloomberg indicates a striking trend among U.S. investors. According to the latest survey by Bank of America, these investors remain fixated on the U.S. stock market while simultaneously reducing their cash holdings to historical lows. This behavior may suggest a contrarian signal—a potential indication that investors might be preparing to sell into a rebound in the U.S. equities market.

The economic environment in Canada has also seen significant turmoil. Canadian Finance Minister Chrystia Freeland handed in her resignation, criticizing Prime Minister Justin Trudeau’s spending plans. This political upheaval has left the Canadian government in a precarious situation, prompting a decline in the value of the Canadian dollar while yields on Canadian government bonds spiked. The unfolding political crisis accentuates the interconnectedness of governance and economic stability in financial markets.

Globally, the financial markets are underpinned by notable trends. The U.S. dollar index has been gaining strength, reinforcing its position within the international monetary system as it continues to rise. Contrarily, crude oil prices on the New York Mercantile Exchange remain relatively low, with current trading prices hovering around $70.00 per barrel. This price stability reflects intricate interactions among supply-demand dynamics, geopolitical factors, and broader market sentiments. Moreover, the bond market reveals that the yield on the benchmark 10-year U.S. Treasury remains fixed at 4.42%, impacting investors’ decisions.

Tuesday is characterized by a flurry of economic data expected to provide insights into various sectors. Key reports such as the weekly Johnson Redbook retail sales, retail sales figures, industrial production, capacity utilization, the NAHB housing index, and manufacturing and trade inventories are set to be released. These data points will be instrumental in assessing the strength and trajectory of the U.S. economy.

From a technical standpoint, bullish sentiment for gold in February has seen a decline in recent momentum. Although the price remains in an overall upward trajectory on daily candlestick charts, the strength of this trend is waning. The next target for bulls is to secure a close above the significant resistance level of $2761.30, the peak from December. Conversely, bears are eyeing the next strategic objective of pushing the futures price below the solid technical support level of $2600.00. Initial resistance appears at this week’s high of $2683.40, followed by a more robust threshold at $2700.00. Meanwhile, first support is pegged at $2651.10, aligned with overnight lows, followed by $2635.60. Our current market rating for gold stands at 6.5 out of 10.

Looking at March silver futures, the recent optimism has faltered, leaving bullish traders without the technical edge they previously enjoyed. The next goal for silver bulls lies in achieving a close above the formidable technical resistance level of $33.33, established in December. On the flip side, short sellers target a close below the critical support level of $30.00. Initial resistance is noted at the week’s high of $31.24, succeeded by $31.63. Anticipated support levels are poised at the overnight low of $30.615, followed by the late November low at $30.095. Our market rating for silver currently resides at 5.0.