Gold Hits 4-Month Low On Strong Dollar, Technical Selling
(Kitco News) - Gold prices are solidly down and dropped to a four-month low in early U.S. trading Tuesday. The recent solid rally in the U.S. dollar index, which hit a nearly four-month high overnight, continues to squelch demand in the precious metals markets. Chart-based selling has also kicked in recently, as the technical postures for gold and silver have deteriorated. June Comex gold futures were last down $10.90 an ounce at $1,308.80. July Comex silver was last down $0.106 at $16.295 an ounce.
World stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. There is not much risk aversion in the world markets at present, which is working in favor of the stock markets but against the gold and silver bulls.
Two important meetings have the attention of the marketplace this week: The Federal Reserve’s Open Market Committee (FOMC) meeting begins Tuesday morning and ends Wednesday afternoon with a statement. Also, a U.S. high-level trade delegation will travel to China later this week to try to avert a trade war between the world’s two largest economies. President Trump late Monday decided to delay by one month implementing on the European Union proposed tariffs on aluminum and steel. Tariffs are in effect for Russia and China.
On Friday is the U.S. employment report from the Labor Department—arguably the most important U.S. data point of the month.
Nymex crude oil prices are weaker and trading just below $68.00 a barrel. The U.S. oil rig count hit a three-year high last week and the IEA on Monday reported that U.S. crude oil production topped 10 million barrels a day in February—a record. These factors will limit buying interest in oil this week.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. manufacturing PMI, construction spending, the ISM manufacturing report on business, and domestic auto industry sales.
Technically, June gold bulls have lost their slight overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,337.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,317.40 and then at $1,320.00. First support is seen at $1,300.00 and then at $1,290.00. Wyckoff's Market Rating: 5.0
July silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at today’s high of $16.37 and then at this week’s high of $16.58. Next support is seen at the March low of $16.185 and then at $16.00. Wyckoff's Market Rating: 3.0.