Make Kitco Your Homepage

Gold prices lose overnight gains as U.S. day session begins

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Gold prices are posting only modest losses in early U.S. trading Thursday and have given up decent overnight gains that came amid bullish outside markets that include a weaker U.S. dollar index and sharply higher crude oilprices. Some more profit taking from the shorter-term futures traders has dinged gold and silver markets early today. Still, the technical posture for gold remains fully bullish, which will very likely continue to invite the chart-based traders to the long side of the market. June gold futures were last down $0.70 an ounce at $1,714.00. May Comex silver prices were last down $0.25 at $14.91 an ounce.

The just-released weekly jobless claims report, which has become the focal point of the marketplace in recent weeks, showed a rise of 3.84 million in new claims. The number was forecast to be 3.5 million. The report is a reminder of the dour state of the U.S. economy. The U.S. stock market also lost its overnight gains after the release of this report.

Global stock markets were mostly firmer in overnight trading. Some upbeat news Wednesday on a drug trial that lessens the effects of Covid-19 and a big rebound in crude oil prices are prompting better trader and investor risk appetite as April winds down today. Many U.S. states are now partially reopening their businesses.

In other news, the European Central Bank left its monetary policy unchanged at its regular meeting Thursday. However, the ECB also painted a very bleak picture for the Euro zone economy. The Euro zone gross domestic product contracted by 3.8% in the first quarter from the fourth quarter of 2019, and was down 14.4%, year-on-year, it was reported overnight. Those numbers are a record for the 14-nation bloc. The year-on-year decline in Euro zone GDP was much greater than the 4.8% drop in U.S. GDP in the same period, and reported on Wednesday.

A Reuters (Refinitiv) survey just released shows global jewelry fabrication volumes, which typically account for around 55% of total physical demand for gold, fell 40% in the first quarter, year-on-year. Investment demand was mixed, with retail investment, which consists of bars and coins, posting an 11% year-on-year drop. Physical gold demand fell to 753 metric tons in the first quarter, the lowest levels since 2009 as higher gold prices led to a drop in consumption. The biggest declines were recorded in Asia at down over 43% year-on-year. Chinese demand recorded a 62% decline in jewelry fabrication in the period.

The important outside markets see Nymex crude oil again solidly higher and trading around $16.80 a barrel. The U.S. dollar index is slightly weaker again today. The greenback bulls are fading this week, partly on notions other major countries’ economies are coming back to life faster than that of the U.S. The 10-year U.S. Treasury note yield is trading around 0.6% this morning.

Other reports out today include personal income and outlays, the employment cost index, and the ISM Chicago business survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,666.20. First resistance is seen at the overnight high of $1,737.00 and then at this week’s high of $1,745.80. First support is seen at this week’s low of $1,704.10 and then at $1,700.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $16.30 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.56. First resistance is seen the overnight high of $15.775 and then at $16.00. Next support is seen at today’s low of $14.795 and then at $14.56. Wyckoff's Market Rating: 5.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.