Gold Sinks To 4-Week Low As U.S. Dollar Resumes Rally
(Kitco News) - Gold are solidly lower and fell to a four-week low in early U.S. trading Wednesday, pressured in part by a resumption of the appreciation of the U.S. dollar on the foreign exchange market. The U.S. dollar index hit a 3.5-month high overnight. June Comex gold futures were last down $10.60 an ounce at $1,322.40. May Comex silver was last down $0.203 at $16.50 an ounce.
World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Investor risk appetite has waned a bit this week on some disappointing corporate earnings reports and worries about rising interest rates and inflation. If the U.S. stock market sells off sharply today, look for gold to see better safe-haven demand that could push prices back above unchanged on the day.
A feature in the marketplace recently has been rising world government bond yields. The U.S. Treasury 10-year note yield on Tuesday moved above 3.0%--the highest level in four years. U.S. bond yields rose further Wednesday morning.
The key “outside markets” on Wednesday morning see the U.S. dollar index trading firmer. A look at several currency-pair charts reveals near-term strong-trending, and even “breakout” price moves that have occurred over the past couple weeks. Trends in currency markets tend to be stronger and longer-lasting than trends in other markets.
Meantime, Nymex crude oil prices are slightly down and trading below $68.00 a barrel. The oil market has been supported recently by stronger world economic growth and on some notions that the U.S. could pull out of a deal struck with Iran regarding its nuclear ambitions. If the U.S. slaps sanctions on Iran again, that would reduce Iran’s capacity to sell oil on the world market.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
Technically, June gold bulls still have the overall near-term technical advantage, but are fading. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. 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 $1,333.80 and then at this week’s high of $1,337.60. First support is seen at $1,320.00 and then at $1,312.40. Wyckoff's Market Rating: 6.0
May silver futures bulls and bears are on a level overall near-term technical playing field. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the April 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 today’s high of $16.71 and then at $16.89. Next support is seen at $16.40 and then at $16.25. Wyckoff's Market Rating: 5.0.