(Kitco News) - Gold prices are lower and silver prices near steady in early 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. June gold was last down $14.90 at $2,341.60. July silver was last down $0.007 at $32.13.
Asian and European stock indexes were mixed to weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
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 modestly up. Nymex crude oil prices are higher and trading around $80.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is on the rise recently and is presently fetching 4.57%.
An interesting Wall Street Journal story today says “one of Wall Street’s favorite recession indicators looks broken.” The report is regarding the inverted U.S. Treasury market yield curve, which means shorter-term government debt has a yield that’s higher than that of the longer-term debt. The past eight U.S. economic recessions have been preceded by an inverted yield curve. However, the present yield curve inversion has been in place since 2019, by some counts. Other measures put the present yield curve inversion’s age at around two years, said the WSJ. It depends on which Treasury maturities are measured. “There is little indication that the inversion will end soon,” said the report.
U.S. economic data due for release Wednesday includes the weekly Johnson Redbook retail sales index, the MBA mortgage applications survey, the Richmond Fed business survey and the Federal Reserve’s beige book.
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
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Email me at jim@jimwyckoff.com and I’ll add your email address to my Front Burner list.)
