Gold, Silver Sell Off As U.S. Dollar Surges
(Kitco News) - Gold and silver prices were solidly lower in early-afternoon U.S. trading Monday. The metals sold off in the face of an appreciating U.S. dollar on the world foreign exchange market. The U.S. dollar index hit a more-than-three-month high today. There is also little risk aversion in the marketplace at present, which is another bearish element for the precious metals markets. June Comex gold futures were last down $13.40 an ounce at $1,325.00. May Comex silver was last down $0.518 at $16.65 an ounce.
A feature in the marketplace at present is rising world government bond yields. The U.S. 10-year Treasury note yield is nearing 3%, which is a four-year high. Some argue that rising bond yields are bearish for gold, pulling investor demand away as gold produces no dividends or interest income. However, rising bond yields also suggest rising inflationary pressures. Problematic inflation is a bullish element for hard assets like the metals. Still, present worldwide inflation levels are not (yet) deemed problematic.
The other key “outside market” on Monday see Nymex crude oil prices slightly weaker and trading just above $68.00 a barrel. Oil prices last week hit a 3.5-year high. Rising oil prices are a bullish factor for the precious metals markets, as crude oil is arguably the leader of the raw commodity sector.
Technically, June gold futures bulls still have the overall near-term technical advantage but have faded and need to show fresh power soon to keep it. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,375.50. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the March low of $1,309.30. First resistance is seen at today’s high of $1,337.60 and then at $1,345.00. First support is seen at the April low of $1,322.60 and then at $1,312.40. Wyckoff's Market Rating: 6.0
May silver futures bulls have faded quickly after prices last week hit a 2.5-month high. The silver bulls and bears are back on a level overall near-term technical playing field. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $17.36 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the March low of $16.10. First resistance is seen at $16.75 and then at $17.00. Next support is seen at today’s low of $16.605 and then at $16.50. Wyckoff's Market Rating: 5.0.
May N.Y. copper closed down 215 points at 311.35 cents today. Prices closed near mid-range. The copper bulls have the slight overall near-term technical advantage. A four-week-old uptrend is in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 320.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at 315.00 cents and then at today’s high of 316.15 cents. First support is seen at 310.00 cents and then at today’s low of 307.80 cents. Wyckoff's Market Rating: 5.5.