(Kitco News) - Gold prices are solidly lower and silver prices up just a bit in midday U.S. trading Wednesday. The precious metals markets are feeling the bearish effect of comments Tuesday by Minneapolis Fed President Neel Kashkari, who leaned hawkish in his comments on U.S. monetary policy. He said U.S. interest rates will be held steady as long as needed, or even raised if necessary. Bearish daily “outside market” forces are also limiting buying interest in the metals markets at mid-week, as the U.S. dollar index is firmly higher, crude oil prices are weaker and U.S. Treasury yields are on the rise. June gold was last down $14.90 at $2,341.60. July silver was last up $0.093 at $32.22.
Silver prices shot sharply higher Tuesday and challenged the recent 11-year high. Frank Watson of Kinesis says: “Silver’s dual role as a precious and industrial metal means it has also benefited from the current environment of reasonably strong economic growth and high inflation, boosting precious metals as a hedge against rising costs, at the same time as market expectations of interest rate cuts later this year which would reduce the opportunity cost of holding non-interest-bearing assets.”
It’s a busy week for U.S. economic data releases, highlighted by Friday’s personal income and outlays report that includes the closely watched PCE inflation indexes.
In other news, the Chinese yuan is at its weakest level against the U.S. dollar since last November, with Chinese monetary authorities refraining from intervention against the strong greenback. Broker SP Angel said this morning in an email dispatch: “Similarly, the Japanese yen is at multi-year lows alongside the Thai baht and Indonesian rupiah. We suggest China may be boosting metal coffers, both base metals like copper and zinc alongside precious metals like silver and gold, to reduce longer term implications of a weaker Chinese currency.”
The key outside markets today see the U.S. dollar index firmly down. Nymex crude oil prices are weaker and trading around $79.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is on the rise recently and is presently fetching 4.612%.
Technically, June gold futures bulls have the overall near-term technical advantage but have faded. A bearish double-top reversal pattern has formed on the daily bar chart to suggest a near-term market top is in place. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,454.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $2,285.20. First resistance is seen at this week’s high of $2,365.50 and then at $2,375.00. First support is seen at last week’s low of $2,326.30 and then at $2,315.00. Wyckoff's Market Rating: 6.0.
July silver futures bulls have the solid overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May high of $32.75. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at the overnight high of $32.515 and then at $32.75. Next support is seen at $31.50 and then at $31.00. Wyckoff's Market Rating: 8.0.
