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Gold, silver prices fade a bit on strong U.S. retail sales

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(Kitco News) - Gold and silver prices are trading near steady in early U.S. trading Tuesday, but have backed down from overnight highs in the wake of a much-better-than-expected U.S. retail sales report for May. A rally in the U.S. stock market due in part to reports that a drug has been realized that can cut death risks of patients on ventilators by one-third has also crimped the safe-haven metals. August gold futures were last up $6.30 an ounce at $1,733.50. July Comex silver prices were last up $0.216 at $17.61 an ounce.

The just-released U.S. retail sales report for May showed a rise of 17.7% versus expectations for a rise of 7.7%. This is yet another U.S. data point that shows a surprising rebound in the U.S. economy from the Covid-19-inducted damage of the past three months.

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. stock indexes on Monday made a strong recovery from sharp early-day losses, due in part to the Federal Reserve announcing it has started buying corporate bonds, in an extension of an existing program that had only purchased corporate bond exchange traded funds. Reports also said the Trump administration is planning to spend $1 trillion on U.S. infrastructure improvements.

There is growing agreement the Federal Reserve will continue to deploy more firepower to support the U.S. economy. Such is ultimately bearish for the U.S. dollar as the U.S. government’s debt obligations continue to bulge. The U.S. dollar index is presently in a steep downtrend on the daily bar chart.

The U.S. economic highlight of the week will be Fed Chairman Jerome Powell’s two days of congressional testimony on Tuesday and Wednesday for his semi-annual economic report to Congress. He may provide more clarity and perspective on the Fed’s bond buying and other monetary policy moves. Traders will monitor to see if his comments expand on his sober assessment of the U.S. economy last week.

In other news, North Korea is ramping up its bellicose activities, as it blew up a meeting facility with South Korea that was just inside the North Korean border. Many look for North Korea to become more provocative with the U.S. as the U.S. presidential election approaches in November.

The important outside markets early today see the U.S. dollar index a bit weaker. Meantime, Nymex crude oil prices are higher and trading around $37.75 a barrel. The International Energy Agency said Tuesday global oil demand in 2020 will decline by 8.1 million barrels per day. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.75% level.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, retail sales, industrial production and capacity utilization, the NAHB housing market index, and manufacturing and trade inventories.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage amid choppy and sideways trading at higher levels. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,761.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at Monday’s high of $1,743.80 and then at $1,750.00. First support is seen at $1,720.00 and then at $1,700.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the overall near-term technical advantage but are fading. Silver bulls' next upside price objective is closing prices above solid technical resistance at last week’s high of $18.405 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at the overnight high of $17.70 and then at $17.87. Next support is seen at $17.25 and then at $17.00. 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.