Gold Sharply Down, at 5-Mo. Low, Prices Drop Below $1,300
(Kitco News) - Gold prices are sharply lower and fell to a nearly five-month low in early U.S. trading Tuesday. Importantly, the yellow metal has fallen below major technical support at $1,300.00. The drop below that key level set off a large number of pre-placed sell stop orders in the futures market, to drive prices still lower. The U.S. dollar index has resumed its trek north today, which is, and has been, a significantly bearish force working against the precious metals bulls. June Comex gold futures were last down $21.20 an ounce at $1,296.60. July Comex silver was last down $0.37 at $16.275 an ounce.
The gold and silver markets saw increased selling pressure in reaction to the U.S. retail sales report for April, which came in at up 0.3%, which was in line with market expectations. The Empire State manufacturing report also came in solid. Analysts deemed the reports as showing a healthy U.S. economy that won’t deter the Federal Reserve from continuing to raise interest rates.
World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, and are trading near their daily lows after the solid U.S. economic data was released.
The benchmark 10-year U.S. Treasury note sees its yield back above 3.0% today.
A downbeat economic growth report from the European Union helped to weigh on equities. First-quarter Euro zone GDP growth came in at up a paltry 0.4%--down from the 0.7% growth rate (quarter-on-quarter) seen in the fourth quarter of last year. Year-on-year 1Q GDP was up 2.5%.
There was a mixed bag of economic data coming out of China today. Industrial output was up more than expected, but retail sales were down more than expected.
Focus of the marketplace this week is on U.S. trade meetings with China that are scheduled to begin in the U.S. today, and a possible U.S. decision on the NAFTA trade agreement with Canada and Mexico.
The other key “outside market” today finds Nymex crude oil prices higher, above $71.00 a barrel and near last week’s 3.5-year high.
Other U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the Empire State manufacturing survey, the NAHB housing market index, and manufacturing and trade inventories.
Technically, June gold bears have gained the 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 $1,326.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at $1,310.00 and then at today’s high of $1,314.70. First support is seen at $1,300.00 and then at $1,290.00. Wyckoff's Market Rating: 4.0
July silver futures bears have also regained the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $16.865 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 $16.565 and then at this week’s high of $16.76. Next support is seen at $16.25 and then at $16.185. Wyckoff's Market Rating: 4.0.