Gold price slumps to 8-mo. low on rising bond yields, bounce in USDX
(Kitco News) - Gold futures prices are solidly lower again in early U.S. trading Friday and hit an eight-month low. Rising government bond yields that are at least short-term bearish for the precious metals markets and a good bounce in the U.S. dollar index Friday are weighing on the precious metals markets. Gold prices are presently headed for a very technically bearish weekly and monthly low close on this last trading day of the week and of the month. April gold futures were last down $14.60 at $1,760.60 and March Comex silver was last down $0.782 at $26.855 an ounce.
Marketplace attention is squarely on the strong rise in government bond yields this week, which saw the benchmark U.S. Treasury yield push above 1.6% at one point late this week. The 10-year yield has backed off a bit Friday and is fetching 1.475%. Higher bond yields are throwing a scare into the stock market bulls who have had a seemingly free pass to higher and higher share prices in recent months. However, the rising bond yields, if they continue to do so, will erode some investor interest in the stock market. The technology sector of stocks is already spooked as seen by bigger losses this week.
Bond yields are climbing on notions the major global economies will break out of their pandemic shackles in strong fashion during the second half of this year. Also, U.S. Democrats are ready to push a $1.9 trillion Covid-19 relief package through the U.S. House Friday. That win is expected despite a setback that means a minimum wage boost is unlikely to be in the final version that reaches President Biden. A near party-line vote seemed certain on the relief measure in the House.
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Bearish weekly and monthly low closes in the stock indexes today would be an ominously bearish signal that the indexes may have put in at least near-term tops if not major tops.
The markets are paying little attention to a U.S. military precision strike against Iranian- backed camps in Syria overnight. U.S.-Iran tensions were already elevated and the U.S. military action may prompt retaliation from Iran.
The key “outside markets” today see Nymex crude oil futures prices weaker and trading around $62.20 a barrel after hitting a 13-month high on Thursday. The U.S. dollar index is solidly higher early today on a corrective bounce from recent selling pressure.
U.S. economic data due for release Friday includes personal income and outlays, the advance economic indicators report, the Chicago ISM business survey, and the University of Michigan consumer sentiment survey.
Technically, the April gold futures bears have the firm overall near-term technical advantage amid a seven-week-old price downtrend in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,773.80 and then at $1,784.60. First support is seen at the overnight low of $1,753.50 and then at $1,750.00. Wyckoff's Market Rating: 3.0
March silver futures bulls still have the overall near-term technical advantage but are fading this week and do not want to see a bearish weekly low close today. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $28.425 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at $27.00 and then at $27.50. Next support is seen at today’s low of $26.625 and then at $26.105. Wyckoff's Market Rating: 6.0.