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Gold falls sharply as trader/investor risk appetite rises

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(Kitco News) - Gold and silver prices are solidly lower in midday U.S. trading Wednesday. Trader and investor attitudes improved markedly early today following the release of a surprising May U.S. ADP jobs report that was not nearly as bleak as had been expected. Heavy profit taking in the futures markets, following recent gains, was featured in both metals today. The safe-haven metals are also seeing limited buying interest at mid-week amid rallies in world equity markets. August gold futures were last down $30.80 an ounce at $1,703.30. July Comex silver prices were last down $0.315 at $17.945 an ounce.

The data point of the day in the U.S. was the ADP national employment report for May, which came in at a surprising loss of 2.7 million jobs when the report was expected to show job losses at just under 9 million. U.S. stock indexes were boosted to new three-month highs on the news. There are growing notions the worst of the Covid-19 pandemic is behind us—both from an economic and human toll perspective. More and more people are questioning whether health experts were too dire in their early predictions. Of course, those who have lost friends and loved ones are not in that camp.

It was a calmer night in America Tuesday, following recent nights of violence in major cities. Still, it could be a long, hot and restless summer in the U.S., reminiscent of the infamous summer of 1968. It’s uncertain whether this major crisis in the U.S. will get better or worse in the coming weeks. Most agree it is not over by any means.

In other news Wednesday, there was better economic news coming out of China, as its Caixin purchasing managers services index (PMI) came in at 55.0 in May from 44.4 in April and reaching the highest level in 10 years. A reading above 50.0 suggests growth in the sector. In the Euro zone the PMI rose to 30.5 in May from 12.0 in April. India’s was 12.6 from 5.4 and Japan’s was 26.5 from 21.5 in the same period. The U.S. services PMI came out better than expectations today, at 45.4 versus expectations of 44.0.

The important outside markets see the U.S. dollar index lower today and hitting an 11-week low. Nymex crude oil prices are weaker after hitting a near three-month high overnight, and presently trading around $36.60 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.76%, which is well up from recent levels, on the uptick in risk appetite. 

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls still have the overall near-term technical advantage but are fading this week and need to step up and show fresh power soon. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at today’s high of $1,738.90. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,668.40. First resistance is seen at $1,720.00 and then at $1,725.00. First support is seen at today’s low of $1,690.30 and then at $1,683.30. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures prices were nearer the session low at midday on profit taking after hitting a nearly three-month high Monday. The silver bulls still have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $19.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.15. First resistance is seen at today’s high of $18.405 and then at $18.50. Next support is seen at today’s low of $17.675 and then at $17.50. Wyckoff's Market Rating: 7.0.

July N.Y. copper closed down 45 points at 248.65 cents today. Prices closed nearer the session low today and did hit a 10-week high early on. The copper bulls have the overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 260.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 230.20 cents. First resistance is seen at today’s high of 250.50 cents and then at 252.50 cents. First support is seen at this week’s low of 242.35 cents and then at 240.00 cents. Wyckoff's Market Rating: 6.5.

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.