(Kitco News) - Gold and silver prices faced a steep decline in early U.S. trading on Wednesday, driven by a resurgence in the U.S. dollar index and downward pressure on crude oil prices. Both metals experienced profit-taking from shorter-term futures traders, following their recent gains. At the end of the trading session, February gold was down by $22.10, settling at $2,051.30, while March silver decreased by $0.483, closing at $23.47.

Overnight, Asian and European stock markets showed mixed to weaker performance. U.S. stock index futures are expected to open lower as the New York day session begins. Market sentiment has turned more risk-averse mid-week, particularly with Israel on high alert for a potential military escalation with Hezbollah following the drone strike in Beirut that killed a top leader of Hamas, which is widely blamed on Israel. The situation has raised concerns about the likelihood of a broader conflict in the Middle East.

In terms of external factors, the U.S. dollar index saw an increase, building on the strength demonstrated in Tuesday's trading session. Nymex crude oil prices remained relatively steady, hovering around $70.25 per barrel, although they continue to trend downwards based on the daily bar chart. Meanwhile, the yield on the benchmark U.S. Treasury 10-year note stood at 3.972%.

From a technical standpoint, the gold futures market is still favoring the bulls in the near term. Prices have been on an upward trend for the past three months, as indicated by the daily bar chart. The next target for the bulls is to surpass resistance at $2,100.00 and achieve a close in March futures. On the other hand, the bears' immediate downside objective is to drive prices below the solid technical support level of $2,000.00. First resistance is noted at $2,060.00, followed by the overnight high of $2,074.30. Support levels are seen at $2,040.00 and $2,030.00. The current Wyckoff's Market Rating for gold is 7.5.

Concerning silver, the bulls still maintain the overall near-term technical advantage, although signs of faltering are evident. Prices have been following a volatile, three-month-long uptrend on the daily bar chart. The bulls' next price objective is to close March futures above solid technical resistance at $25.00. Conversely, the bears aim to achieve prices below the solid support level at the December low of $22.785. First resistance is seen at $24.00, followed by this week's high of $24.335. Support is noted at $23.25 and $23.00. The Wyckoff's Market Rating for silver stands at 6.0.

In line with his expert analysis, Jim Wyckoff, a renowned figure with extensive experience in the stock, financial, and commodity markets, shared his insights on the future outlook of the markets in his upcoming "Markets Front Burner" email report. Readers can look forward to his analysis titled "When China sneezes..." by signing up for his free weekly newsletter.

Wyckoff, who has covered various futures markets throughout his career as a journalist, including working on the commodity futures trading floors in Chicago and New York, currently operates his analytical, educational, and trading advisory service, "Jim Wyckoff on the Markets." He has also served as a technical analyst for Dow Jones Newswires and as the senior market analyst with TraderPlanet.com.

It's important to note that the views expressed in this article are solely those of the author and may not align with Kitco Metals Inc. While the author has strived for accuracy, neither Kitco Metals Inc. nor the author can guarantee the information's complete precision. This article is strictly for informational purposes and should not be considered a solicitation to engage in any financial transactions. Any losses or damages arising from the use of this publication are not the responsibility of Kitco Metals Inc. or the author.