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Gold sees price weakness as greenback gains

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(Kitco News) - Gold prices are modestly lower in early morning U.S. trading Friday, pressured in part by solid gains in the U.S. dollar index on this last trading day of the week. Some more routine profit taking from the shorter-term futures traders is featured this morning. August gold futures were last down $5.40 at $1,889.80 and July Comex silver was last up $0.194 at $28.22 an ounce.

Global stock markets were mixed but mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins and at or near record highs. The global marketplace remains calm at present, amid no major geopolitical flareups in play and some typical summertime-doldrums trading occurring. That leaves the discussion in the marketplace on inflation prospects.

The key U.S. Treasury 10-year note yield is fetching 1.44% and is at a more-than-three-month low. This comes despite the U.S. consumer price index on Thursday showing the biggest surge in inflation in 13 years—up 5.0% in May, year-on-year. Low U.S. Treasury yields are a major argument that inflation is not on course to become problematic. Other indicators do suggest otherwise and thus the debate continues on the matter.

In other overnight news, reports say China will tap state reserves to control surging commodity prices. China will offer copper, aluminum, zinc and other commodities directly to end-users in order to curb the rally in commodity prices, according to a Bloomberg report. China is also planning on expanding pork inventories and accelerating the construction of coal infrastructure in order to have greater control over both markets.

The marketplace will monitor the weekend meeting of the Group of Seven countries in the U.K. A draft of the meeting communique shows the group will focus on the pandemic and the G-7 collective relations with China and Russia.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are slightly up and trading around $70.50 a barrel after hitting a 2.5-year high of $70.65 on Thursday.

U.S. economic data due for release Friday is light and includes the University of Michigan consumer sentiment survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls have the firm overall near-term technical advantage amid a nine-week-old price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the June high of $1,919.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,900.00 and then at this week’s high of $1,906.90. First support is seen at this week’s low of $1,871.80 and then at $1,866.70. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage and are working to restart a two-month-old price uptrend on the daily bar. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at the May high of $28.90 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at this week’s high of $28.445 and then at $28.71. Next support is seen at $28.00 and then at this week’s low of $27.475. Wyckoff's Market Rating: 6.5.

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