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Price pressure on gold, silver as USDX, bond yields rise

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(Kitco News) - Gold and silver prices are down in early U.S. dealings Friday, with silver falling to a six-week low. A rally in the U.S. dollar index late this week is a bearish outside market element for the metals. A slight rise in U.S. Treasury yields today is also a bit negative for the safe-haven metals. June gold was last down $11.50 at $2,009.20 and July silver was down $0.459 at $23.075.

The silver market has been pounded this week. On Wednesday silver was trading with a “26 handle" and now that handle is down to 23 as of this writing. Worries about slowing global economic growth reducing consumer and commercial demand for the metals has hit silver especially hard this week. Copper futures prices hit a 5.5-month low overnight. Less demand for copper, a leading global commercial construction component, also hints of a slowing world economy.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite is not robust to end the trading week. Regional banking turmoil and the specter of the U.S. government running out of money by June 1 loom over the marketplace. Reports said a planned meeting between President Biden and congressional leaders set for today has been pushed into next week.

There are indeed growing concerns about a U.S. and/or global economic recession. News out of China adds to those concerns. Broker SP Angel reports: “China to export deflation as manufacturers overproduce into falling local demand." Data alongside anecdotal evidence suggests the ramp-up of manufacturing, post Covid Lockdown, has been met with poor local demand. “Discounted goods will be increasingly sold into international markets, indicating a return to the export of product deflation around the world. Worse still, a proportion of Chinese workers are reported to be paid per unit produced, indicating the threat of lower production will hit local demand," said the broker.

Silver prices surprise with a 5% selloff, but its structural bull market remains in place - analysts

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are firmer and trading around $71.25 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.412%.

U.S. economic data due for release Friday includes import and export price indexes and the University of Michigan consumer sentiment survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close in June futures above solid resistance at the May high of $2,085.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,980.00. First resistance is seen at the overnight high of $2,022.70 and then at $2,040.00. First support is seen at $2,000.00 and then at $1,980.00. Wyckoff's Market Rating: 7.5.

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have lost their overall near-term technical advantage amid this week's big sell off. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today's high of $24.37 and then at $24.735. Next support is seen at $23.75 and then at $23.50. Wyckoff's Market Rating: 5.0.

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.