(Kitco News) - Gold and silver prices are higher in early U.S. trading today, as traders and investors stepped up their safe-haven buying as the war in the Middle East is still running hot. Down-ticks in global government bond prices and higher crude oil prices today are also supportive for the two precious metals markets. June gold was last up $44.10 at $4,568.50. May silver prices were up $1.22 at $71.06.
Latest on the war in Iran…
--U.S. and Israel continue to hit Iran, while Tehran launched missiles across the Gulf region
--Crude oil surged, with Brent trading near $115 a barrel and WTI over $100 a barrel
--Energy crisis continues to grow, with the Strait of Hormuz effectively remaining shut
--Hormuz oil flows at crisis levels, leaving almost a 15 mb/d deficit in global oil balance
--Iran’s grip on Hormuz Is tighter than ever after a month of war: Bloomberg
--Trump told reporters Sunday that an agreement to end fighting could come soon.
--Iran has since said U.S. demands are excessive and illogical
--Trump tells Financial Times he wants to “take the oil in Iran”
--Reports say U.S. considering operation to extract enriched uranium from Iran
President Trump told the Financial Times he wants to “take the oil” in Iran, possibly seizing the export hub of Kharg Island. Trump’s interview with the FT comes as thousands of U.S. troops massed in the Persian Gulf region, including an amphibious assault team that arrived on Saturday. Portions of the 82nd Airborne is also on its way. Trump told the FT on Sunday “his preference would be to take the oil.” He compared the effort to the operation in Venezuela in January, when the U.S. captured the South American country’s leader, Nicolas Maduro, and plans to control its oil industry. Trump told FT that taking Kharg Island “would also mean we had to be there for a while.”
Government bond prices rally around the globe on economic slowdown worries. Sovereign bond markets’ prices rose around the world as concern the Middle East war will derail world economic growth. “U.S. treasuries advanced with U.K. and Japanese bonds on speculation that surging oil prices may be just a harbinger of a protracted global fuel shortage. That’s helping boost demand for government debt that until recently had been under selling pressure as fears over quickening inflation outweighed their traditional haven appeal,” said a Bloomberg report. “The market is now letting its imagination run wild about what the world might look like in a month’s time if there is no resolution by then” to the war, said Gareth Berry, a strategist at Macquarie Group Ltd. “Parallels with Covid are already being identified as economies are at risk of shutting down — this time due to lack of fuel,” he said and as reported by Bloomberg. The bond price rallies come after weeks of selling that was driven by surging oil costs and concern over potential central bank interest-rate hikes. “The recent shift in focus toward slowing economic growth is easing fears that central banks will need to adopt an aggressively hawkish stance to control inflation,” said the report.
The key outside markets see Nymex WTI crude oil prices higher and trading around $101.75 a barrel. The U.S. dollar index is modestly up early today. The yield on the benchmark 10-year U.S. Treasury note is presently 4.4 percent.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, June gold futures bulls’ next upside price objective is to produce a close above solid resistance at $4,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $4,100.00. First resistance is seen at $4,600.00 and then at $4,634.00. First support is seen at $4,500.00 and then at the overnight low of $4,444.70. Wyckoff's Market Rating: 4.0.
May silver futures bulls see their next upside price objective is closing prices above solid technical resistance at $80.00. The next downside price objective for the bears is closing prices below solid support at $60.00. First resistance is seen at $72.50 and then at $74.80. Next support is seen at the overnight low of $67.70 and then at $65.00. Wyckoff's Market Rating: 4.0.
(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! Sign up here; it’s real easy. https://www.kitco.com/services)
