Powerful Greenback Hammers Gold and Silver Prices Below Key Support
(Kitco News) - Gold and silver prices are sharply lower in early-afternoon U.S. trading Tuesday. Gold fell to a five-month low today. Importantly, the yellow metal has fallen well below major technical support at $1,300.00. The U.S. dollar index surged to a five-month high today, as the currency has been a significantly bearish force working against the precious metals bulls. June Comex gold futures were last down $28.60 an ounce at $1,289.50. July Comex silver was last down $0.39 at $16.255 an ounce.
The gold and silver markets also saw 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 today. Analysts deemed these reports as showing a healthy U.S. economy that won’t deter the Federal Reserve from continuing to raise interest rates. In fact, some market watchers are now thinking the Fed could be a bit more aggressive on tightening its monetary policy.
Adding to the upside push for the greenback today was a downbeat gross domestic product report coming out of the Euro zone today, that helped to sink the Euro currency against the dollar.
U.S. Treasury note and bond yields rose to multi-year highs today, with the benchmark 10-year note pushing above the psychologically important 3.0% level. Rising bond yields could pull away investor demand for gold, which carries no dividend, and given the higher yearly payback the bond market is currently offering. However, it can also be argued the higher bond yields suggest higher price inflation, which could support gold (and other hard assets) should it become problematic down the road.
Focus of the marketplace this week is on U.S. trade meetings with China that were 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 slightly lower, just below $71.00 a barrel and not far below last week’s 3.5-year high.
Technically, gold prices dropped below major psychological support at $1,300.00, to produce chart damage and suggest more downside price pressure is coming. Prices are now in a two-month-old downtrend on the daily bar chart. The gold bears now have 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 the May high of $1,326.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the December low of $1,247.20. First resistance is seen at $1,300.00 and then at $1,310.00. First support is seen at today’s low of $1,289.80 and then at $1,280.00. Wyckoff's Market Rating: 4.0
The silver bears have regained the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the May high of $16.865 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at $16.50 and then at today’s high of $16.565. Next support is seen at today’s low of $16.205 and then at $16.07. Wyckoff's Market Rating: 4.0.
July N.Y. copper closed down 345 points at 305.80 cents today. Prices closed nearer the session low today. The copper bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the April high of 321.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 295.85 cents. First resistance is seen at today’s high of 310.30 cents and then at this week’s high of 313.10 cents. First support is seen at today’s low of 303.45 cents and then at the May low of 301.40 cents. Wyckoff's Market Rating: 5.0.