Gold, Silver Prices See Corrective Rebounds From Recent Pressure

(Kitco News) –  Gold and silver prices are higher in early U.S. trading Monday, on upside corrections from recent selling pressure that has produced near-term chart damage in the gold market. A shaky U.S. dollar on the foreign exchange market and higher crude oil prices are bullish “outside market” forces working in favor of the metals market bulls to start the trading week. Still bearish for the safe-haven metals is upbeat trader and investor risk appetite recently that has seen money flowing into equities markets. August gold futures were last up $13.50 an ounce at $1,696.40. July Comex silver prices were last up $0.411 at $17.89 an ounce.

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The Nasdaq hit a record high overnight, while the S&P 500 stock index hit a three-month high. Businesses in major global economies continue to reopen and that’s lifting trader and investor spirits. However, the more social interaction the past couple weeks has caused an increase in Covid-19 infections in some U.S. states. Still, that could be just because more testing for infections is being done than in weeks past. Also, the civil unrest in the U.S. has turned much less violent and by far mostly peaceful.

The marketplace is mostly shrugging off some stated reporting errors in Friday’s shockingly upbeat U.S. employment report from the Labor Department. Those reporting errors made the report look more rosy than it would have been otherwise, but the errors were not major. Friday’s report suggested the U.S. economy will see a “V-shaped” recovery from the Covid-19 damage. “We are likely to see the shortest (U.S.) recession on record,” said one market analyst. Friday’s huge miss by analysts/economists on the jobs data in May raises questions on the accuracy of assumptions made by central banks, including the Federal Reserve, the past few months. Important questions include: What if the central banks greatly misjudged the overall damage to their economies and their recovery rates? Did the central banks severely over-react on monetary stimulus packages, which could create bigger problems (inflation) down the road?

In overnight news, economic data out of China was downbeat. China’s imports in May were down 16.7%, year-on-year. Exports were down 3.3% in the same period.

The important outside markets see the U.S. dollar index slightly lower early today and not far above last Friday’s 11-week low. Meantime, Nymex crude oil prices are higher, hit a three-month high overnight, and trading around $39.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.91% level. Bond yields have risen significantly the past few sessions.  

U.S. economic data due for release Monday is light and includes the employment trends index.

Technically, the gold bulls have faded as a price uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,750.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,650.00. First resistance is seen at the overnight high of $1,701.50 and then at $1,715.00. First support is seen at today’s low of $1,680.70 and then at last week’s low of $1,671.70.

July silver futures bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $19.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $18.05 and then at $18.25. Next support is seen at today’s low of $17.495 and then at $17.20.

Posted by :

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com