Gold Down, Back Below $1,300; U.S.-N. Korea Summit No Markets-Mover
(Kitco News) - Gold prices are moderately lower and have dropped back below the psychologically important $1,300.00 level in early U.S. trading Tuesday. Gold and silver markets did not react significantly to the just-concluded U.S.-North Korea summit. August Comex gold futures were last down $4.10 an ounce at $1,299.10. July Comex silver was last down $0.122 at $16.825 an ounce.
The world marketplace is taking in stride the apparent positive conclusion of the summit meeting on denuclearization between U.S. President Donald Trump and North Korean President Kim Jong Un. World stock markets were mixed to weaker after the meeting, with U.S. stock indexes set to open steady to slightly lower when the New York day session begins.
Gold, U.S. Treasuries and the world currency markets were showing muted reactions to the summit’s conclusion—probably because traders and investors realize there are going to be lots of twists and turns on the road to complete denuclearization of North Korea, but still reckon this is a good start.
Also on tap early today was the U.S. consumer price index (CPI) for May. CPI came in at up 0.2% from April and up 2.8%, year-on-year. Those numbers were in line with market expectations and had little impact on the markets.
Attention will quickly turn to the Federal Reserve’s Open Market Committee (FOMC) meeting that begins today and ends Wednesday afternoon with a statement. It is widely expected the FOMC will raise U.S. interest rates by 0.25% at this meeting. Fed Chair Jerome Powell will have a press conference following the meeting.
The European Central Bank also holds its monetary policy meeting on Thursday. No change is expected in ECB policy, but the central bank is still on a path of easy money that is keeping its interest rates very low, and diverging with those of the U.S. By the end of the year the spread between key U.S. and Euro zone interest rates is expected to be around 3.0%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, the consumer price index, real earnings and the monthly Treasury budget statement.
Technically, August gold bulls and bears are in a level overall near-term technical playing field. A seven-week-old downtrend on the daily bar chart has been negated. Gold bulls' next upside near-term price breakout objective is to produce a close above the May high of $1,332.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,286.80. First resistance is seen at last week’s high of $1,307.80 and then at last week’s high of $1,312.60. First support is seen at the Junes low of $1,293.10 and then at $1,286.70. Wyckoff's Market Rating: 5.0
July silver futures bulls have the overall near-term technical advantage as prices hit a six-week high on Monday. 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 June low of $16.335. First resistance is seen at Monday’s high of $16.975 and then t $17.00. Next support is seen at Monday’s low of $16.77 and then at $16.645. Wyckoff's Market Rating: 6.0.