Gold, silver prices down on demand worries, bearish outside markets

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(Kitco News) - Gold and silver prices are solidly lower near midday Tuesday. Weaker economic data coming out of China has prompted increased concerns about consumer and commercial demand for precious metals. Meantime, bearish outside market forces on this day are working against the metals markets—firmer U.S. dollar index, weaker crude oil and rising U.S. Treasury yields. June gold hit a two-week low today and was last down $20.20 at $2,002.40. July silver hit a six-week low today and was last down $0.441 at $23.845.

Risk appetite is not robust today but that is not helping out the safe-haven metals bulls at this point. U.S. stocks are mostly weaker after Home Depot reported a downbeat outlook for the retail consumer. U.S. House Speaker Kevin McCarthy said debt-ceiling negotiations have seen no progress. Congressional leaders and President Biden were set to meet at the White House today. The U.S. government could run out of money as soon as June 1. Said Ed Moya of OANDA: "Wall Street is bracing for something bad to happen, but no one has an idea on what will be that catalyst. It could be a debt-ceiling impasse, persistent banking fears, or a much weaker consumer as sticky inflation becomes more noticeable."

Meantime, U.S. retail sales rose 0.4%, an improvement from the 1.0 drop seen in the prior month, but less than the 0.8% consensus estimate.

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.

The key outside markets today see the U.S. dollar index firmer and near the daily high. Nymex crude oil prices are slightly lower and trading around $71.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.5%.

Technically, June gold futures prices hit a two-week low today. Bulls still have the firm overall near-term technical advantage. Prices are still in a 2.5-month-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the record high of $2,085.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,980.90. First resistance is seen at today's high of $2,022.70 and then at this week's high of $2,027.50. First support is seen at $2,000.00 and then at $1,980.90. Wyckoff's Market Rating: 7.0

July silver futures prices hit a six-week low today. The silver bulls and bears are on a level overall near-term technical playing field but the bulls are fading. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April and May high of $26.435. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week's high of $24.395 and then at $24.735. Next support is seen at $23.50 and then at $23.25. Wyckoff's Market Rating: 5.0.

July N.Y. copper closed down 780 points at 367.30 cents today. Prices closed nearer the session low and hit a 5.5-month low today. The copper bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 350.00 cents. First resistance is seen at today's high of 375.45 cents and then at this week's high of 377.90 cents. First support is seen at today's low of 365.70 cents and then at 360.00 cents. Wyckoff's Market Rating: 3.0.