Profit-taking pressure, gold and silver prices fall

Gold and silver prices fell sharply in early US trading on Monday. The day was dominated by large profit-taking and weak long position squaring by short-term futures traders. Overnight, silver futures for March delivery on the New York Mercantile Exchange (Comex) hit an all-time high of $82.67; on Friday, gold futures for February delivery hit an all-time high of $4,584.00. February gold futures fell $165.40 to $4387.30 during the session; March silver futures fell $4.596 to $72.60.

In overnight news, President Trump said Sunday's talks with Ukrainian President Vladimir Zelensky on a possible peace deal had "made significant progress" but could take weeks to complete. Zelensky said the peace framework was "90 percent agreed" and the U.S.-Ukraine security agreement was "100 percent agreed", but major points of disagreement remained, including the future status of Ukraine's Donbass region. Trump said he was open to addressing Ukraine's parliament or holding trilateral talks with Zelensky and Russian President Vladimir Putin, with a meeting with Zelensky and European leaders planned for January. Although the joint press conference between Trump and Zelensky was harmonious after the meeting in Florida, it is clear that Trump is still far from his goal of ending the Russian-Ukrainian conflict.

Copper futures climbed to a record high of $5.80 a pound overnight on the back of tight global supplies. Copper futures on the London Metal Exchange hit $12,960 a tonne, following strong gains in Shanghai and New York. The red industrial metal then pulled back on profit-taking. In December alone, copper surged more than 15 per cent, taking the year to almost 50 per cent on supply concerns.

China's offshore renminbi weakened to around 7 against the dollar on Monday, down from a 15-month high, as investors turned cautious as the People's Bank of China sought to rein in rapid one-way moves in the exchange rate. The People's Bank of China set the central parity rate for the yuan just below market expectations, sending a signal to curb excessive appreciation of the yuan, while the media also warned against betting on unilateral appreciation of the yuan. Analysts also pointed out that seasonal foreign exchange flows and rising demand supported the overall upward trend of the yuan, but as the year-end settlement is completed, the appreciation pressure of the yuan is expected to ease. Despite short-term caution, global investors still expect the yuan's upward momentum to continue until 2026, and the key 7 mark may be tested again, although authorities have reiterated their commitment to maintaining exchange rate stability. The renminbi has rallied more than 4.1 per cent against the dollar this year, putting it on track for its biggest annual gain since 2020.

Key peripheral market developments today: the US dollar index is basically flat; crude oil prices are stable at around $58.50 per barrel; and the benchmark 10-year US Treasury yield is currently 4.118%.

(COMEX gold daily chart, source:XM ForexNetwork)

From a technical perspective, the next upside target for gold futures bulls in February is to push prices to close above the strong resistance level of $4600.00. The near-term downside target for bears is to push futures prices below the solid technical support level of $4,300.00.

The price action of March silver futures today has formed a sharply bearish "buy-exhausted long upper shadow" pattern - the bulls have exhausted momentum at the high point, and the price has fallen sharply and closed near the low of the day. The next upside goal of the bulls is to push the price to close above the strong technical resistance level of today's all-time high of $82.67. The next downside goal of the bears is to push the price below the solid support level of $70.00.