Gold, Silver Hit By Slumping Raw Commodity Markets
(Kitco News) - Gold and silver prices are moderately lower in early U.S. trading Tuesday, with gold slumping to a six-month low, as major raw commodity markets are selling off amid fears of a major world trade war. Adding to downside pressure on the precious metals is a surging U.S. dollar index that hit an 11-month high today. August Comex gold futures were last down $7.10 an ounce at $1,273.00. July Comex silver was last down $0.20 at $16.24 an ounce.
World stock markets were solidly lower overnight and U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. Risk aversion is high today after the Trump administration has threatened China with still more trade tariffs, and China has again responded with its own latest threats. The world’s two largest economies appear headed for a full-blown trade war.
There was some safe-haven demand seen for gold in overnight trading. However, gold and silver have once again opted to trade in line with the raw commodity sector, instead of as safe-haven assets. I still suspect that gold will garner at least some safe-haven demand if the trade situation with major U.S. trading partners deteriorates further.
In other news, European Central Bank President Mario Draghi told reporters today the ECB could opt to extend its bond-buying program (quantitative easing) beyond its now-scheduled ending date of Decemberâ€”if the Euro zone shows further economic weakness.
The key “outside markets” today find the U.S. dollar index higher and hitting another 11-month high overnight. Meantime, Nymex crude oil prices are lower and trading just below $65.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, and new residential construction.
Technically, gold bears have the overall near-term technical advantage and have re-established a price downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close in August futures above solid 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 $1,251.90. First resistance is seen at $1,280.00 and then at today’s high of $1,286.80. First support is seen at $1,270.00 and then at $1,265.00. 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 $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 $16.50 and then at this week’s high of $16.70. Next support is seen at $16.19 and then at the May low of $16.07. Wyckoff's Market Rating: 4.0.