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Gold, Silver Bulls Showing Some Resilience In Face Of Negative Elements

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(Kitco News) - Gold and silver prices are near steady in midday U.S. trading Thursday, following selling pressure this week that pushed both metals to four-month lows. Given the very strong U.S. dollar index that hit a two-year high overnight and U.S. stock indexes that are at or near multi-month and record highs, the gold and silver market bulls could be faring much worse recently. However, the bulls do need a fundamental catalyst to spark significant rally in prices. That’s been a tough chore in a generally quiet marketplace at present. June gold futures were last up $0.60 an ounce at $1,280.00. May Comex silver was last down $0.016 at $14.90 an ounce.

This morning’s U.S. economic data included weekly jobless claims and durable goods orders that showed a mixed bag, with jobless claims coming in higher than expected and durables orders better than forecast. Metals prices showed no significant reaction to the reports.

Asian and European stock indexes were mixed to weaker overnight. Asian markets were somewhat pressured by some downbeat GDP data coming out of South Korea. At down 0.3% in the first quarter, South Korea’s GDP was the weakest in over 10 years. The dour report prompted the central banks in China and Japan to signal they had no intention of tightening their monetary policies anytime soon.

In other overnight news, Sweden’s Riksbank kept its monetary policy unchanged but said it likely won’t start raising interest rates until farther down the road. Riksbank’s current interest rate is -0.25%. The bank had previously said it hoped to start raising interest rates in the second half of 2019. The Swedish krona dropped sharply against the dollar on the news. This news is another signal that world interest rates remain historically low, including German bond yields this week dropping back below zero percent. This argues that worldwide inflationary pressures should remain well under control. Very low inflation is the archenemy of raw commodity market bulls, including the metals markets.

The U.S. dollar index did back down a bit today after hitting a two-year high overnight. A feature in an otherwise fairly quiet marketplace this week is the surging greenback. Raw commodity markets have taken note of the strong dollar and many are feeling selling pressure as a result. Many raw commodities are priced in U.S. dollars on the world markets. So when the dollar appreciates against the other currencies, it makes those commodities more expensive to purchase in non-U.S. currency.

Another marketplace highlight recently finds Nymex crude prices trending higher, but prices are slightly down at midday on some normal profit taking. Prices Tuesday hit a six-month high of $66.60 a barrel. Brent crude oil prices climbed above $75 this week. Oil experts now reckon worldwide oil demand is outstripping supplies by around 500,000 barrels a day. At this point the rally in oil prices has not had much impact on world stock and financial markets, and could even be termed on the friendly side for equities. However, if oil prices continue to trend higher in the coming weeks, consumers and the marketplace will start to squirm a bit due to the bite of higher energy costs cutting into their overall spending on other goods. Read that bearish for stocks (reduced consumer spending) and bonds (concerns regarding rising inflation).

Live 24 hours gold chart [Kitco Inc.]

Technically, June gold futures bears have the overall near-term technical advantage. A two-month-old downtrend line on the daily bar chart is in place. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at today’s high of $1,284.80 and then at $1,290.00. First support is seen at today’s low of $1,275.20 and then at this week’s low of $1,267.90. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures prices closed near mid-range today. The silver bears have the overall near-term technical advantage. A two-month-old downtrend is in place on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.15 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at this week’s high of $15.04 and then at $15.25. Next support is seen at today’s low of $14.815 and then at this week’s low of $14.70. Wyckoff's Market Rating: 3.5.

May N.Y. copper closed down 425 points at 286.80 cents today. Prices closed nearer the session low and hit a four-week low today. The copper bulls have the overall near-term technical advantage amid recent choppy trading at higher price levels. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 283.45 cents. First resistance is seen at 290.00 cents and then at this week’s high of 293.25 cents. First support is seen at today’s low of 286.05 cents and then at 283.45 cents. Wyckoff's Market Rating: 6.5.

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