Gold sees price gains as U.S. Treasury news quickly shaken off
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(Kitco News) - Gold prices are moderately higher in morning U.S. trading Wednesday, after seeing a bit of brief selling pressure following news 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 have since backed off from their daily highs. June gold futures were last up $5.90 at $1,781.80 and July Comex silver was last down $0.008 at $26.545 an ounce.
Global stock markets were higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins, after selling off Tuesday.
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."
In the Euro zone Wednesday, the March producer price index came in at up 1.1% from February and up 4.3%, year-on-year. Those numbers are running a bit hotter than in previous months, but still not deemed problematic.
The key outside markets today see the U.S. dollar index a bit lower. Nymex crude oil prices are lower after hitting a seven-week high Tuesday, and are trading around $66.50 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.6%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. Treasury quarterly refunding announcement, the U.S. services PMI, the ISM report on business services, the global services PMI, and the weekly DOE liquid energy stocks report.
Technically, June gold futures bulls have the slight overall near-term technical advantage amid a price uptrend on the daily bar chart. However, the bulls need to show fresh power soon to keep the price uptrend alive. 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 last week's low of $1,754.60. First resistance is seen at the overnight high of $1,783.40 and then at $1,790.00. 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
The silver bulls have the overall near-term technical advantage amid a price uptrend in place on the daily bar chart. Silver bulls' next upside price objective is closing July futures 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 the overnight high of $26.71 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.