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Gold price up on some safe-haven demand

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(Kitco News) - Gold prices are firmer in early U.S. trading Wednesday, on modest safe-haven demand as the clock keeps ticking toward the U.S. government potentially running out of money to pay its obligations. Silver prices are near steady. June gold was last up $9.90 at $1,984.40 and July silver was down $0.034 at $23.59.

A report Tuesday afternoon said President Biden and House Speaker McCarthy have not made much progress on the U.S. debt-ceiling extension discussions. Another report said government spending is the main divisive issue between Republicans and Democrats. U.S. Treasury Secretary Janet Yellen this week reiterated the U.S. government could run out of money by June 1 if no new debt-extension deal is reached.

In a rare development, traders and investors are shunning shorter-term U.S. Treasury bills (less than one-year maturities) over fears of a U.S. government default on that debt. This has caused high-grade U.S. corporate bonds to trade at a yield discount to U.S. Treasury bills. U.S. Treasury debt up to now had been considered the safest investment in the world.

Asian and European stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

Meantime, one report said Covid-19 is flaring up again in China and infections will get worse before they get better. The report said up to 65 million new cases a day could occur in China this summer. China government officials months ago stopped giving the public information on the Covid situation.

Traders and investors will closely scrutinize the afternoon release of the minutes from the last FOMC meeting of the Federal Reserve.

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The key outside markets today see the U.S. dollar index near steady after hitting another two-month high overnight. Nymex crude oil prices are higher and trading around $74.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.684%.  

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the FOMC minutes and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the overall near-term technical advantage but have faded recently. Prices are trending down on the daily bar chart. 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 $1,900.00. First resistance is seen at $1,988.80 and then at $2,000.00. First support is seen at the overnight low of $1,972.60 and then at the May low of $1,954.40. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage. Prices are trending lower on the daily chart. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $24.50. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at Tuesday’s high of $23.81 and then at $24.00. Next support is seen at the overnight low of $23.41 and then at this week’s low of $23.235. 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.