Precious Metals Markets Under Pressure: Between Profit-Taking and Structural Reorganizations

The Silver Crash and Gold Weakness

During the US session on Thursday, January 8, both gold and silver experienced a significant downward move. March silver futures saw a particularly sharp decline, trading at $73.83 per ounce with a loss of $3.783. The February gold contract, on the other hand, settled at $4431.7 per ounce, down by $30.8.

Market dynamics reveal that short-term traders are taking profits on accumulated positions, while bullish investors are forced to close weak exposures. Silver has developed a bearish technical setup that has caused panic among bullish operators across both sectors.

What Gold and Silver Lack: The Positive News Issue

A well-established principle in trading suggests that mature bull markets require a steady flow of positive catalysts to stay solid. Currently, both gold and silver seem to be lacking sufficiently robust fundamental support factors. This narrative void coincides with a critical moment: the annual rebalancing of commodity indices.

According to Citigroup estimates, this rebalancing operation could involve selling approximately $6.8 billion in silver futures contracts, with similar outflows from the gold sector. The root cause lies in the increased weighting of precious metals within benchmark indices, leading to capital flows outward in the coming days.

The Macroeconomic Context: Slowing Layoffs, Persistent Concerns

US employment data from Challenger, Gray & Christmas surprised on the upside. In December, 35,553 layoffs were announced, the lowest since July 2024 and significantly lower than the 71,321 in November. This could be a potentially positive sign after 2024, which recorded a total of 1,206,374 layoffs, up 58% compared to the previous year.

However, 2024 set the worst record since 2020, with the tech sector leading the layoffs with 154,445 dismissals. According to Andy Challenger: “The tech industry is at the forefront of implementing artificial intelligence. Combined with the overhiring of the past decade, this has fueled waves of sectoral unemployment.” Planned new hires reached only 507,647 positions, 34% less than in 2024 and the lowest since 2010.

Regulatory Uncertainties: The Supreme Court and Tariffs

An additional source of market disruption comes from the legal front. The US Supreme Court could rule on Friday regarding the legality of using the International Emergency Economic Powers Act of 1977 to impose tariffs. Trump invoked this emergency law, never before used, to support large-scale “reciprocal” tariffs.

Lower courts have already determined that the presidential recourse exceeded constitutional limits. If the Supreme Court confirms this position, much of the tariffs imposed during the second term could be revoked, forcing the government to reimburse tens of billions of dollars. However, the administration has alternative legal options, with at least five different ways to reimplement tariffs, albeit with greater procedural restrictions.

Defensive Policy and Global Energy Dynamics

Trump announced an increase in US defense spending by $500 billion, bringing the budget to $1.5 trillion. He also signed executive orders limiting stock buybacks and dividends for defense contractors until significant increases in research and development capex. This move penalized stocks of Raytheon Technologies, Northrop Grumman, Lockheed Martin, and General Dynamics.

Meanwhile, the US strategy on Venezuelan oil represents a potentially radical change in energy markets. The government intends to acquire control of up to 50 million barrels of Venezuelan crude, reactivating supplies to US refineries after years of sanctions. This decision has already exerted pressure on Canadian oil prices and benchmark futures.

Technical Analysis of Gold: Critical Levels and Outlook

Technical analysis of February gold futures identifies the all-time high at $4584.00 per ounce as the next bullish target for a decisive close. The first resistance is at the previous night’s high of $4475.20 per ounce, followed by $4500.00. Primary support is at $4400.00 per ounce, with the weekly low at $4354.60 as a secondary level.

In the short term, bears aim to break below the key technical support at $4284.30 per ounce. The formation of a double top on the daily chart indicates a technical pattern signaling bearish intentions.

Technical Analysis of Silver: Pattern and Targets

The movement of silver futures has raised concerns about the formation of an inverted double top pattern on the daily timeframe. The bullish target remains a close above the all-time high at $82.67 per ounce. The first resistance is at $75.00 per ounce, with $76.00 as a second level.

Primary support for silver is at $74.00 per ounce, followed by $72.50. The bearish target remains the low from last week at $69.225 per ounce, representing the critical level beyond which negative pressure would accelerate.

Market Context: Spot vs. Futures Markets

Gold prices are primarily determined through two channels: the spot market for immediate delivery and the futures market for future deliveries. Due to liquidity and year-end adjustments, December gold contracts remain the most active on the Chicago Mercantile Exchange.

Summary movement: the dollar index is slightly strengthening, oil trades around $57.00 per barrel, and the yield on US 10-year Treasuries stands at 4.16%.