Gold price a bit weaker amid rising USDX, U.S. bond yields

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(Kitco News) - Gold and silver prices are slightly lower in early U.S. trading Thursday, with silver dropping to a two-month low. A surging U.S. dollar index and rising U.S. Treasury yields are bearish outside market elements working against the precious metals on this day. However, losses in the metals are being limited as risk appetite remains muted. June gold was last down $1.60 at $1,962.10 and July silver was down $0.11 at $23.13.

Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward mixed to firmer openings when the New York day session begins. The marketplace is getting more anxious as U.S. lawmakers and the Biden administration have not come to an agreement to extend the government debt limit. U.S. Treasury Secretary Yellen has said the government could run out of money by June 1.

Reports said the Fitch credit-rating agency put the U.S. on watch for a possible downgrade. "Fitch still expects a resolution to the debt limit before the X-date (1 June)," the credit agency said in a report. Both Fitch and Moody's currently rate the U.S. debt at top AAA and Aaa, respectively, while S&P ranks it at AA+ after a downgrade in 2011 amid debt-ceiling negotiations during that time.

In other overnight news, Germany's economy, the workhorse of the European Union, slipped into recession in the first quarter. Germany's 1Q GDP was revised to -0.3%. The German economy contracted by 0.5% in the fourth quarter of 2022.

The key outside markets today see the U.S. dollar index firmer and hitting another two-month high overnight. Nymex crude oil prices are lower and trading around $73.25 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.7%.  

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the second estimate of first-quarter GDP, pending home sales and the Kansas City Fed manufacturing survey.

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 this week's high of $1,987.90 and then at $2,000.00. First support is seen at the May low of $1,954.40 and then at $1,950.00. Wyckoff's Market Rating: 6.0

The silver bears have the overall near-term technical advantage. Prices hit a two-month low overnight and 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 Wednesday's high of $23.655 and then at $24.00. Next support is seen at $23.00 and then at $22.75. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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