Price pressure on gold, silver following downbeat China data

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(Kitco News) - Gold and silver prices are lower in early U.S. dealings Tuesday. Some weaker economic data coming out of China has prompted increasing concerns about consumer and commercial demand for precious metals. June gold was last down $12.00 at $2,010.70 and July silver was down $0.316 at $23.975.

China, the world's second-largest economy, got a generally downbeat data dump Tuesday. Industrial production rose 5.6%, year-on-year, in April--short of market expectations for a 10.1% growth rate. Industrial production rose 3.9%, year-on-year in March. Fixed asset investment was also lower than expected at 4.7%, year-on-year, compared to expectations of up 5.2%. Chinese electricity output fell in March by 8.2%, year-on-year. Aluminum output weakened in March and steel output has been declining. Gas output for March also declined as did coal mine production.

Meantime, Comex copper futures prices are trending lower and just hit a 5.5-month low. The red industrial metal has been called "Dr. Copper" for decades. It's an important building component in global construction and thus can help forecast world demand in that major industry. Copper's present price downtrend and multi-month low are indicating an anemic global economy at present. That's also bearish element for gold and silver, from a demand perspective.

Asian stock markets were mixed overnight and European shares were mixed but mostly lower. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Focus today is on the scheduled U.S. debt-limit extension talks. Congressional leaders and President Biden will likely meet at the White House. The U.S. government could run out of money as soon as June 1.

The Eurozone reported its first-quarter GDP at up 0.1% from the fourth quarter and up 1.3%, year-on-year. Those numbers were right in line with market expectations.

The International Energy Agency has raised its 2023 global crude oil demand by 100,000 barrels per day, to 102 million barrels per day.

The U.S. data point of the day is the April retail sales report, which is expected to come in at up 0.8% from March and compares to the 1.0% decline seen in the March sales report.

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are near steady and trading around $71.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.472%.

Other U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and retail chain store sales indexes, industrial production and capacity utilization, the NAHB housing market index, and manufacturing and trade inventories.

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 last Friday's high of $2,027.80 and then at $2,040.00. First support is seen at last week's low of $2,005.70 and then at $2,000.00. Wyckoff's Market Rating: 7.5

The silver bulls and bears are on a level overall near-term technical playing field. 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 $23.00. First resistance is seen at last Friday's high of $24.405 and then at $24.735. Next support is seen at today's low of $23.84 and then at $23.50. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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