Gold Weaker, At 5-Mo. Low; More Downside Likely, Unless...
(Kitco News) - Gold prices are modestly lower and dropped to another five-month low in early U.S. trading Thursday. A strong U.S. dollar continues to cast a bearish shadow over the precious metals markets. June Comex gold futures were last down $3.30 an ounce at $1,288.20. July Comex silver was last up $0.079 at $16.45 an ounce.
World stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. Another negative for the gold and silver markets is the relatively upbeat trader and investor attitudes presently in the market place. However, there are at least a couple of storm clouds building off in the horizon, regarding the geopolitical front. And those storm clouds could soon come to the rescue of the safe-haven gold and silver markets.
European markets are a bit concerned about Italy and notions that country may threaten to pull out of the Euro zone bloc if the EU does not write off some of its heavy financial debt owed to the bloc. This situation will only add to the recent selling pressure against the Euro currency, and in turn be a bullish element for the surging U.S. dollar. However, a destabilized European Union would favor gold due to keener risk aversion.
Also, the apparent unraveling of the brief courtship between the U.S. and North Korea regarding North Korea’s pledge to “de-nuclearize” could produce trader and investor anxiety in the coming weeks.
The gold market needs a booster shot of bullish news, and history shows the world marketplace won’t remain calm indefinitely.
The U.S. trade meetings with China in Washington, D.C., begin in earnest today. Also, an agreement on an updated NAFTA trade deal between the U.S., Canada and Mexico is unlikely to be announced late this week, as the Trump administration had hoped would be the case.
The key “outside markets” today find Nymex crude oil prices higher and hitting a 3.5-year high above $72.00 a barrel. Brent crude oil futures prices pushed above $80.00 a barrel today. Meantime, the U.S. dollar index is firmer and hovering near this week’s five-month high.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and the leading economic indicators report.
Technically, June gold bears have the overall near-term technical advantage and still have momentum. Gold bulls' next upside near-term price breakout objective is to produce a close above what is now solid technical resistance at $1,300.00. 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 the overnight high of $1,294.00 and then at $1,300.00. First support is seen at the overnight low of $1,284.00 and then at $1,280.00. Wyckoff's Market Rating: 3.5.
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 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 $16.50 and then at Tuesday’s high of $16.565. Next support is seen at this week’s low of $16.19 and then at the May low of $16.07. Wyckoff's Market Rating: 3.0.