Gold, silver rise on safe-haven demand as U.S. debt vote looms
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(Kitco News) - Gold and silver prices are higher near midday Wednesday, boosted by some safe-haven buying just ahead of U.S. lawmakers voting to extend the U.S. government's debt limit. While the majority of the marketplace expects the debt deal to pass both the U.S. House and Senate, there is just uncertainty over the outcome to produce some trader and investor anxiety. Falling U.S. Treasury yields this week are also working in favor of the gold and silver market bulls. August gold was last up $10.80 at $1,988.30 and July silver was up $0.361 at $23.60.
U.S. stock indexes are lower near midday, also on skittishness as the debt-limit-extension votes draw closer. Even though Democrat and Republican leaders' negotiators agreed upon a U.S. debt-limit-extension package, there are still some worries the measure will not be approved by both bodies. June 5 is the latest deadline set by the U.S. Treasury for the U.S. government debt limit to be extended, or else the government could default on some of its financial obligations.
Traders at mid-week are also focusing on weaker-than-expected economic data coming out of China. China's factory activity contracted for the second straight month. The official purchasing managers index (PMI) for May dropped to 48.8 (below expectations) after a reading of 49.2 in April. A reading below 50.0 suggests contraction in the sector. A report in the Wall Street Journal today said "China's era of rapid growth is over. Its recovery from zero-Covid is stalling. And now the country is facing deep, structural problems in its economy." China is a major importer and consumer of raw commodities. The weak China data falls into the camp of the metals market bears, due to the potential for less Chinese demand for them.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are lower, hit a nearly four-week low, and are trading around $68.50 a barrel. Concerns about weaker global energy demand have hit crude oil hard this week. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.65%.
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The U.S. economic data pace picks up the rest of this week, highlighted by the U.S. employment situation report from the Labor Department on Friday morning.
Technically, August gold futures bulls have the overall near-term technical advantage. However, prices are still in a four-week-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today's high of $1,993.10 and then at $2,000.00. First support is seen at today's low of $1,971.80 and then at this week's low of $1,949.60. Wyckoff's Market Rating: 6.0
July silver futures bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing 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 $23.80 and then at $24.00. Next support is seen at today's low of $23.16 and then at $23.00. Wyckoff's Market Rating: 4.0.
July N.Y. copper closed down 245 points at 363.85 cents today. Prices closed near mid-range. The copper bears have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 385.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 335.00 cents. First resistance is seen at this week's high of 371.10 cents and then at 375.00 cents. First support is seen at 360.00 cents and then at the May low of 354.50 cents. Wyckoff's Market Rating: 3.5.