Gold Down; Gets No Help From Geopolitical Tensions
(Kitco News) - Gold and silver prices are moderately lower in early U.S. trading Tuesday. A very strong U.S. dollar and a slumping crude oil market are trumping an uptick in geopolitical tensions early this week. June Comex gold futures were last down $6.30 an ounce at $1,297.20. July Comex silver was last down $0.161 at $16.385 an ounce.
World stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins.
Geopolitical risk is squarely on the front burner of the marketplace early this week. The Italian president on Sunday blocked an anti-establishment government from forming. There is also an upcoming election in Spain, where the right-wing candidate is expected to do well. All of this is putting strong downside pressure on the Euro currency, which fell to a seven-month low against the U.S. dollar overnight.
The U.S.-North Korea nuclear summit may be back on, as the U.S. has sent a team of negotiators and planners to Singapore to set up the summit meeting between U.S. President Trump and North Korean President Kim Jong Un. However, given recent North Korean actions, the summit could quickly be off again.
U.S. Treasuries are seeing some safe-haven demand today, on geopolitics. While gold prices are not seeing much of a safe-haven bid, so far, the Italian and Spanish political uncertainty could boost the yellow metal if the marketplace perceives those two countries as moving away from the European Union bloc of countries.
The key “outside markets” today find Nymex crude oil prices lower, hitting a six-week low and trading around $67.00 a barrel. Last Friday’s bearish weekly low close and the recent steep downdraft are technical clues the market has put in at least a near-term top. U.S. oil production is at an all-time high and Russia and Saudi Arabia have pledged to open their oil spigots some more. Slumping oil prices are an underlying negative for the raw commodity sector, including the precious metals.
Meantime, the U.S. dollar index is solidly higher and hit a 10.5-month high, as the greenback continues its surge higher, partly on perceived safe-haven demand.
U.S. economic data due for release Tuesday includes the S&P/Case-Shiller home price index, the consumer confidence index and the Texas manufacturing outlook survey.
Technically, June gold bears still have the slight overall near-term technical advantage. Prices are still in a seven-week-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above the May high of $1,326.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,281.20. First resistance is seen at last week’s high of $1,307.20 and then at $1,309.00. First support is seen at the overnight low of $1,294.60 and then at $1,286.70. Wyckoff's Market Rating: 4.5
July silver futures bulls and bears are back on a level overall near-term technical playing field, amid recent choppy trading. 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 the May low of $16.07. First resistance is seen at today’s high of $16.53 and then at last week’s high of $16.74. Next support is seen at $16.28 and then at $16.19. Wyckoff's Market Rating: 5.0.