Gold, silver sink as USDX rallies, crude dips; Powell on deck
Gold and silver prices are solidly lower in midday U.S. trading Tuesday, feeling the pressure of a higher U.S. dollar index and lower crude oil prices on this day. August gold was last down $23.40 at $1,947.90 and July silver was down $0.891 at $23.235.
The marketplace awaits Fed Chair Jerome Powell’s latest thoughts. He will provide his semi-annual monetary policy report to Congress on Wednesday and Thursday. Powell is widely expected to repeat comments from his post-Fed meeting press conference, which had a hint of caution but still opened the door to higher rates down the road. The marketplace will be closely watching the testimony for any fresh clues on the timing of the rate increases. Should Powell strike a hawkish note, this could boost the U.S. dollar and U.S. Treasury yields. But if he is more downbeat and fails to provide fresh clues, this may weaken the greenback and lower yields.
Part of the U.S. dollar’s strength today can be attributed to a much-stronger-than-expected U.S. housing market report showing May housing starts up 21.7% and building permits up 5.2%.
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The S&P 500 and Nasdaq stock indexes are not far below last week’s 10-month highs.
In overnight news, China again slightly eased its monetary policy by lowering two key lending rates by 10 basis points. The rate reductions were deemed by China watchers as less than expected.
Gold price is stuck in neutral, but that is its strength now
The key outside markets today see the U.S. dollar index solidly higher on a corrective bounce from recent selling pressure. Nymex crude oil prices are lower and trading around $70.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.711%.
Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. However, the bears have re-established a price downtrend 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 the overnight high of $1,971.80 and then at $1,987.80. First support is seen at the June low of $1,936.10 and then at $1,925.00. Wyckoff's Market Rating: 5.0
The silver bulls have lost their overall near-term technical advantage amid sideways and choppy trading. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at the June high of $24.62. The next downside price objective for the bears is closing prices below solid support at the May low of $22.785. First resistance is seen at $23.50 and then at $24.00. Next support is seen at $23.00 and then at the May low of $22.785. Wyckoff's Market Rating: 5.0.
By
Jim Wyckoff
For Kitco News
David