Gold price near steady despite bearish outside elements

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(Kitco News) - Gold prices are trading around unchanged in early U.S. dealings Wednesday. The bulls are impressed their yellow metal is holding up well in the face of bearish outside markets that include a higher U.S. dollar index and slumping crude oil prices. Falling U.S. Treasury yields this week are working in favor of the gold and silver market bulls. August gold was last up $1.00 at $1,978.10 and July silver was up $0.201 at $23.44.

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

Traders at mid-week are 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.

Even though Democrat and Republican leaders' negotiators have agreed upon a U.S. debt-limit-extension package, the deal still needs to pass the U.S. House and Senate. 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. This matter appears to still be producing some slight safe-haven demand for gold and silver.

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 $68.00 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 3.646%.  

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Johnson Redbook retail sales index, the Chicago ISM business survey, and the Federal Reserve's beige book. The U.S. data pace really picks up the rest of this week, highlighted by the U.S. employment situation report from the Labor Department on Friday morning.  

Technically, the gold futures bulls have the overall near-term technical advantage but have faded recently. Prices hit a nine-week low overnight and are trending down on the daily bar chart. Bulls' next upside price objective is to produce a close in August futures 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 $1,985.00 and then at $2,000.00. First support is seen at $1,960.00 and then at this week's low of $1,949.60. Wyckoff's Market Rating: 6.0

The silver bears have the overall near-term technical advantage. Prices hit a two-month low last week and are trending lower on the daily chart. 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 $22.00. First resistance is seen at the overnight high of $23.595 and then at $23.80. Next support is seen at $23.00 and then at the May low of $22.785. Wyckoff's Market Rating: 4.0.