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Gold, silver see tepid rebounds after Thursday' shellacking

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(Kitco News) - Gold and silver prices are moderately up in early U.S. trading Friday on corrective rebounds after dropping sharply and hitting five-week lows Thursday. August gold futures were last up $9.20 at $1,783.70 and July Comex silver was last up $0.349 at $26.195 an ounce.

Some more hawkish comments on U.S. monetary policy by Federal Reserve official James Bullard on CNBC Friday morning took gold and silver prices down from overnight highs and pressured the U.S. stock indexes. Global stock markets were mixed but mostly weaker overnight. U.S. stock indexes are now pointed toward lower openings when the New York day session begins.

The aftermath of the Fed's FOMC meeting conclusion Wednesday afternoon, which produced a hawkish bent by the U.S. central bank, has very significantly altered the landscape of the marketplace. A look at markets' price action the past 36 hours shows many of them had major, counter-trend moves that at the very least "wrong-footed" traders and investors and at worst made them become insolvent. Soybean oil futures, for example, had been trending solidly higher and last week hit a record high. Price action this week has seen that market careen sharply lower, including two days in a row of being "locked-limit-down," meaning that those with bullish bets on the long side were trapped in the price downdraft and unable to exit their major losses. The lean hog futures market saw a similar scenario this week.

Bloomberg reports the U.S. Treasury yield curve has seen its biggest two-day tightening of spreads between shorter-term instruments and longer-term instruments since March of 2020, following the Wednesday FOMC meeting. The yield on the 30-year bond dropped to 2.07%, with investors pulling back their inflation bets after Fed officials signaled two rate hikes by the end of 2023. The marketplace apparently has taken heed to the Fed's insistence that inflation will be only transitory. Consequently, the "reflation trade" has at least temporarily fizzled, as seen by Thursday's major drubbing of most raw commodity futures markets.

The key outside markets today see the U.S. dollar index near steady and hitting another two-month high overnight. Nymex crude oil futures are a bit lower and trading around 70.75 a barrel. The yield on the benchmark U.S. 10-year Treasury note is fetching 1.51%.

There is no major U.S. economic data due for release Friday.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bears have the overall near-term technical advantage. Prices have dropped well below the key 200-day moving average and are now trending lower on the daily chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,800.00 and then at Thursday's high of $1,826.40. First support is seen at today's low of $1,773.50 and then at $1,767.90. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage after this week's strong selling pressure. 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 $25.00. First resistance is seen at the overnight high of $26.555 and then at $27.00. Next support is seen at $26.00 and then at this week's low of $25.82. Wyckoff's Market Rating: 4.0.

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.