Gold pauses as marketplace remains pensive
Gold prices are modestly lower and have traded both sides of unchanged, while silver prices are higher in U.S. trading Wednesday. Both markets are in a pause mode as tentative traders and investors ponder the next
development in the volatile Middle East. June gold was last down $6.50 at
$2,401.70. May silver was last up $0.249 at $28.635.
The heightened geopolitical tensions in the Middle East—namely the Iran#Israel hostilities—have taken center stage in the general marketplace. Traders and investors have temporarily pushed supply and demand and economic fundamentals to the back burner and are keenly focused on the next shoe to drop in the Israel-Iran military confrontation. Such is evidenced by gold and silver markets rallying on safe-haven buying recently, despite normally bearish fundamentals at present that include rising U.S. Treasury yields, a rallying U.S. dollar index and a hawkish#leaning Federal Reserve.
Federal Reserve Chairman Jerome Powell in remarks on Tuesday afternoon cast a hawkish tone on U.S. monetary policy. He said U.S. inflation persists, calling into question whether the Fed can cut interest rates this year. He suggested interest rates may have to remain higher for longer, to get inflation back down to a level where the Fed feels more comfortable. U.S. Treasury yields rose to five-month highs after Powell’s comments. Powell’s hawkish lean is a bearish element for the precious metals markets. However, at present, heightened geopolitics are trumping economic fundamentals.
In other news, broker SP Angel reported overnight that metals analysts say central banks are buying around 25% of annual gold production–the highest level since the early 1970s when the Bretton Woods accord unraveled.
The key outside markets today see the U.S. dollar index slightly lower on a corrective pullback after hitting a 5.5-month high on Tuesday. Nymex crude oil prices are weaker and trading around $84.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around
4.6%.
Technically, June gold futures bulls have the strong overall near-term
technical advantage. A two-month-old uptrend is in place on the daily bar
chart. Bulls’ next upside price objective is to produce a close above
solid resistance at $2,500.00. Bears' next near-term downside price
objective is pushing futures prices below solid technical support at
$2,300.00. First resistance is seen at $2,425.00 and then at the contract
high of $2,448.80. First support is seen at today’s low of $2,389.00 and
then at Tuesday’s low of $2,379.20. Wyckoff's Market Rating: 9.0
May silver futures bulls have the strong overall near-term technical advantage. A two-month-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at this week’s high of $29.10 and then at $29.50. Next support is seen at $28.00 and then at this week’s low of $27.665. Wyckoff's Market Rating: 8.5.
May N.Y. copper closed up 670 points at 437.05 cents today. Prices closed nearer the session high. The copper bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 450.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 415.00 cents. First resistance is seen at this week’s high of 439.65 cents and then at 445.00 cents. First support is seen at this week’s low of 427.05 cents and then at 420.00 cents. Wyckoff's Market Rating: 8.0.
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Jim Wyckoff
David