Gold Held Hostage By Strong Greenback
(Kitco News) - Gold prices are once again weaker in early U.S. trading Tuesday. The yellow metal at present is caught in a strangle-hold from an appreciating U.S. dollar index that hit a 4.5-month high overnight. June Comex gold futures were last down $3.50 an ounce at $1,310.30. July Comex silver was last down $0.01 at $16.485 an ounce.
It is critical for the gold market bulls to keep their precious metal above chart support at $1,300.00. A drop below that key level would set off sell stop orders in the futures market, which would likely help to trigger of a solid leg down in prices.
There is growing concern the U.S. will not renew a deal struck with Iran in 2015 to curtail its nuclear arms development. President Trump says he will announce his decision on the matter Tuesday afternoon. The Iran nuke agreement expires Saturday. If the U.S. pulls out of the agreement, sanctions against Iran will be reapplied, including ostensibly sharply curbing Iranian oil exports.
In overnight news, China’s exports increased 12.9% in April, year-on-year, while its imports were up 21.5%. Both numbers beat market expectations. China’s top economic advisor will travel to the U.S. next week to resume trade-dispute negotiations between the world’s two largest economies.
The “outside markets” today find crude oil prices lower on profit taking after hitting a 3.5-year high above $70.00 on Monday. Today’s announcement from Trump is likely to move the oil markets.
Meantime, the U.S. dollar index is higher and hit a 4.5-month high overnight. The index is in a steep price uptrend and the greenback bulls have technical power to suggest more upside in the near term.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, and the IDB/TIPP economic optimism index.
Technically, June gold bulls and bears are on a level overall near-term technical playing field. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,338.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,320.10 and then at $1,325.00. First support is seen at the May low of $1,302.30 and then at $1,300.00. 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 last week’s high of $16.62 and then at $16.75. Next support is seen at $16.38 and then at $16.25. Wyckoff's Market Rating: 3.5.