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Gold, silver blindsided by hawkish Yellen comments

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(Kitco News) - Gold and silver prices are lower in midday U.S. trading Tuesday, following surprising remarks coming from the U.S. Treasury Secretary and former Federal Reserve Chair Janet Yellen, who said U.S. interest rates may need to rise. Gold and silver prices had poked to nine-week highs in early trading today. Also bearish for the precious metals on this day is a rebound in the U.S. dollar index. June gold futures were last down $15.50 at $1,776.30 and July Comex silver was last down $0.53 at $26.41 an ounce.

Speaking in a webinar hosted by The Atlantic, Yellen warned that interest rates might have to rise to stop the U.S. economy from overheating. "It may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat, even though the additional spending is relatively small relative to the size of the economy," she said in the presentation, catching the marketplace by surprise. What is surprising is that Yellen's comments seem to contrast with present Fed Chairman Jerome Powell's recent statements that U.S. interest rates are not likely to rise any time soon. While Yellen's remarks today were surprising to most, they seem logical to many veteran market watchers, including this one, who have advocated for quite some time that there have been too many easy-money "irons put in the fire" to not create an overheating U.S. economy and the prospect of problematic price inflation. Many raw commodity prices are at multi-year highs, with lumber prices skyrocketing to record highs. The trajectory of rising U.S. government bond yields has also prompted speculation of inflation that could become hotter than central banks and governments want to see.

Global stock markets were mostly flat overnight. U.S. stock indexes are lower at midday. With no major geopolitical fires burning at present and Covid-19 mostly tamped down in most major economies, focus of traders and investors had been mostly upbeat quarterly corporate earnings reports and the still-easy monetary policies of the major central banks of the world. Those are bullish elements for the equities markets. However, Yellen's hawkish comments Tuesday could throw a monkey-wrench into the bull market run in equities—at least for a while.

In overnight news, Australia's central bank left its monetary policy unchanged at its regular meeting Tuesday. The Royal Bank of Australia said it expects no rise in its interest rates until at least 2024. The RBA did not portray inflation as becoming problematic.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are higher, hit a six-week high, and  are trading around $65.60 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.62%. For perspective, the German 10-year bund is yielding -0.192% and the U.K. gilt is at 0.837%.

Live 24 hours gold chart [Kitco Inc.]

Technically, June gold futures bulls have the slight overall near-term technical advantage as a four-week-old uptrend on the daily bar chart has been restarted. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,790.00 and then at $1,800.00. First support is seen at this week's low of $1,765.60 and then at last week's low of $1,754.60. Wyckoff's Market Rating: 5.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the overall near-term technical advantage. A five-week-old uptrend on the daily bar chart has been restarted. Silver bulls' next upside price objective is closing prices above solid technical resistance at $28.00 an ounce. The next downside price objective for the bears is closing prices below solid support at last week's low of $25.745. First resistance is seen at $26.765 and then at $27.00. Next support is seen at $26.00 and then at this week's low of $25.85. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed up 40 points at 453.30 cents today. Prices closed nearer the session high today and closed at a contract and nearly 10-year high close. The copper bulls have the strong overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 460.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 420.00 cents. First resistance is seen at the contract high of 455.10 cents and then at 460.00 cents. First support is seen at this week's low of 443.50 and then at 440.00 cents. Wyckoff's Market Rating: 9.0.

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.