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Gold gains ground amid friendly charts, higher crude oil

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(Kitco News) - Gold prices are moderately higher in midday U.S. trading Wednesday, supported by a mildly bullish near-term technical posture and by rallying crude oil prices that hit a two-month high today. Silver is under mild selling pressure. June gold futures were last up $6.60 at $1,782.60 and July Comex silver was last down $0.033 at $26.525 an ounce.

Gold and silver saw some selling pressure following news Wednesday morning that the U.S. Treasury said it may take extraordinary measures to fund the government if the federal borrowing limit is reinstated this summer. Treasury warned it could run out of cash sooner than in previous debt-limit clashes between lawmakers. The current suspension of the U.S. debt limit expires August 14. U.S. Treasury bond yields rose on the news, helping to pressure the precious metals. However, bond yields then since backed off from their daily highs.

The featured scheduled data point in the U.S. at mid-week is the ADP national employment report for April, which came in up 742,000—not far from the expected rise of 800,000 and compares to a gain of 517,000 jobs in March.

U.S. Treasury Secretary and former Fed Chair Janet Yellen late Tuesday walked back hawkish comments she made earlier that day. Yellen Tuesday morning warned U.S. 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. Later, Yellen clarified her comments made earlier. "It's not something I'm predicting or recommending...; if anyone appreciates the independence of the Federal Reserve, I think that person is me." The marketplace was surprised by Yellen's morning remarks, including the stock market selling off, and gold and silver doing the same. While the marketplace was surprised by Yellen's initial comments on raising rates, many veteran market watchers agreed with her logic, which is essentially to keep serious price inflation at bay. In a sign of the economic times, a Dow Jones Newswires headline Wednesday morning read, "Everything Screams Inflation."

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are higher and hit a two-month high today and  are trading around $66.40 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.593%.

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 is in place on the daily bar chart. 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 is in place. 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 today's high of $26.71 and then at $27.00. Next support is seen at today's low of $26.165 and then at $26.00. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed up 110 points at 453.25 cents today. Prices closed near mid-range today and hit a contract and nearly 10-year high. 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 today's contract high of 457.25 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.