(Kitco News) - Gold and silver prices are lower again in early U.S. trading Wednesday. The downside price corrections in the two precious metals continue, following their recent moves to a record high in gold and a three-year high in silver. Downside price corrections in existing uptrends can be painful for the bulls, but they are a normal occurrence in all traded markets. Importantly, the price uptrends on the daily bar charts for gold and silver are still in place and have not been broken. More strong selling pressure in the near term would likely do such, to then begin to suggest near-term market tops are in place. June gold was last down $13.10 at $2,329.00. May silver was last down $0.182 at $27.185.
Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed to toward firmer openings when the New York day session begins.
An important theme has developed in the marketplace, especially in the foreign exchange market, the past few months. DowJones Newswires today has a headline that reads: “Asian central banks face policy dilemma from Fed rate-cut delay, FX crunch.” In the story, reporter Fabiana Negrin Ochoa says a surprise rate hike by Indonesia’s central bank accentuates expectations that the start of monetary policy easing is looking increasingly far off for many Asian central banks -- if on the horizon at all. The Asian central banks fear they cannot cut rates before the Federal Reserve because it would further undermine their currencies that are already feeling the pressure of an appreciating U.S. dollar. Asian central banks lowering rates before the Fed does risks pushing inflation in the region higher. Yet, by delaying rate cuts the Asian central banks risk curbing economic growth by keeping borrowing costs higher. Recently, the Japanese yen and Chinese yuan have depreciated significantly against the dollar, as well as the currencies of South Korea, Indonesia and Malaysia.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are slightly down and trading around $83.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.62%. These three markets are in bearish daily postures for the precious metals at mid-week, which is also adding to selling pressure in gold and silver -- especially from the shorter-term futures traders.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders and the weekly DOE liquid energy stocks report.
Technically, the gold futures bulls have the firm overall near-term technical advantage. However, a nine-week-old uptrend on the daily bar chart has stalled out. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $2,400.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,250.00. First resistance is seen at the overnight high of $2,344.40 and then at $2,400.00. First support is seen at this week’s low of $2,304.60 and then at $2,300.00. Wyckoff's Market Rating: 7.0.
The silver bulls have the firm overall near-term technical advantage but have faded. A nine-week-old uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at this week’s high of $28.795. The next downside price objective for the bears is closing prices below solid support at $25.00. First resistance is seen at the overnight high of $27.525 and then at $28.00. Next support is seen at this week’s low of $26.715 and then at $26.575. Wyckoff's Market Rating: 7.0.
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