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More price pressure on gold amid strong dollar, bearish charts

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(Kitco News) - Gold is modestly lower and silver near steady in early U.S. trading Wednesday. Gold hit an 8.5-month low and silver a two-year low overnight. The metals continue to reel from a stronger U.S. dollar index that hit a 20-year high this week. The near-term technical charts for gold and silver are fully bearish, which is also prompting the technically based traders to play the short sides of the futures markets. August gold futures were last down $4.10 at $1,760.10. September Comex silver futures were last up $0.024 at $19.145 an ounce.

Global stock markets were mixed overnight, with European shares mostly up and Asian shares mostly down. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Recession and inflation worries are still tamping down trader and investor risk appetite, although U.S. stock indexes did rebound from lower price levels Tuesday to close with modest gains. It appears recession fears are trumping inflation fears at present, evidenced by the major sell offs in many raw commodity futures markets Tuesday, led by a drop of around $9 a barrel in Nymex crude oil futures.

In overnight news, the OPEC secretary general Mohammed Barkindo, a native of Nigeria, has died suddenly. Also, top ministers of U.K. Prime Minister Boris Johnson’s government have resigned.

Traders are awaiting this afternoon’s release of the minutes from the last FOMC meeting of the Federal Reserve.

Gold price erases $35 on U.S. dollar strength, all eyes on FOMC minutes, jobs data

The U.S. data point of the week is Friday’s employment situation report for June. The key non-farm payrolls number is expected to come in up 250,000 compared to the 390,000 rise in the May report.

The key outside markets today see Nymex crude oil prices slightly firmer and trading around $100.00 a barrel. The U.S. dollar index is a bit weaker after hitting a 20-year high Tuesday. The yield on the 10-year U.S. Treasury note is fetching 2.814%. The 2-year and 10-year note are presently inverted (meaning the 2-year yield is higher than the 10-year), which is another clue that the U.S. economy is teetering on recession.  

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Johnson Redbook and chain store sales reports, the U.S. services purchasing managers index (PMI), the ISM report on business services, the job openings and labor turnover survey (JOLTS), and the global services PMI.

Live 24 hours gold chart [Kitco Inc.]

Technically, the August gold futures bears have the solid overall near-term technical advantage as prices hit an 8.5-month low overnight. 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 $1,700.00. First resistance is seen at the overnight high of $1,771.50 and then at the May low of $1,792.00. First support is seen at $1,750.00 and then at last September’s low of $1,729.80. Wyckoff's Market Rating: 1.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bears have the solid overall near-term technical advantage as prices hit a two-year low overnight. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May low of $20.525. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at the overnight high of $19.325 and then at $19.85. Next support is seen at the overnight low of $18.705 and then at $18.00. Wyckoff's Market Rating: 1.0.

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.