(Kitco News, Tues. May 2nd, 2023) – Gold and silver pricesare solidly higher on safe-haven buying interest as trader and investor risk aversion has quickly up-ticked amid a sharp drop in U.S. banking stocks today. U.S. Treasury yields have also dropped on flight-to-quality buying amid the higher anxiety in the marketplace. June gold was last up $31.20 at $2,022.70 and July silver was up $0.43 at $25.665.

It appears that all of a sudden the marketplace is viewing the U.S. regional banking sector as very shaky, especially as the Federal Reserve is set to raise interest rates, which in theory should further undermine the banking sector that is already struggling with higher rates as bigger depositors opt for better returns in U.S. Treasuries.

Today’s reported weakest U.S. “JOLTS” labor turnover survey report in two years helped to jolt the marketplace today.

(By the way, I encourage you to check out my new daily item, “Kitco daily macro-economic/business digest.” If you need to be up to speed quickly on the latest news that’s impacting or has the potential to impact the general marketplace, this report can be your one-stop shopping. Check it out and let me know what you think.)

Global stock markets were mixed overnight. Some European markets and mainland China remained closed for a holiday. U.S. stock indexes are sharply lower at midday. The U.S. stock index bulls were enjoying price uptrends on the daily bar charts but hit a major speed bump today.

In other news, U.S. Treasury Secretary Janet Yellen has warned the U.S. government could be in default on some of its payments by June 1 if the debt limit is not increased. Reports said President Biden is calling congressional leaders to the White House to discuss the matter. This news may have also put a bid into the safe-haven gold market.

Ray Dalio: The U.S. and China are on ‘the brink of an economic resources war’

Traders are anxiously awaiting the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is expected to raise its main U.S. interest rate (the Fed funds rate) by 0.25%. The European Central Bank also meets Thursday. The ECB is also expected to raise its main interest rate by a quarter-point. Also, on Friday comes the U.S. employment situation report from the Labor Department. Corporate earnings reports continue to flow out this week, including Apple’s results.

A Barrons story today says: “Markets seem convinced the Federal Reserve will deliver one more quarter-point hike Wednesday before a lengthy pause. But investors buying into that school of thought should heed a cautionary tale from Down Under. Australia’s central bank shocked investors with a 25 basis-points hike Tuesday, also warning that more rises may be needed—sticky inflation was to blame.” The Barrons story said the marketplace thought the Reserve Bank of Australia was done raising rates after it hiked by 25 basis points in April. Two better-than-expected U.S. manufacturing reports on Monday seem to corroborate the Barrons story that more than just one quarter-point U.S. rate hike is in the cards.

The key outside markets today see the U.S. dollar index slightly down. Nymex crude oil prices are sharply lower and trading around $72.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.5443%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail indexes, manufacturers’ shipments and inventories, the job openings and labor turnover (JOLTS) survey, and domestic auto industry sales.

Technically, June gold futures bulls have the solid overall near-term technical advantage and gained fresh power today. Bulls’ next upside price objective is to produce a close above solid resistance at the April high of $2,063.40. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the April low of $1,965.90. First resistance is seen at the March high of $2,031.70 and then at $2,050.00. First support is seen at $2,000.00 and then at this week’s low of $2,015.40.

July silver futures bulls have the solid overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the April high of $26.435. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.80 and then at $26.00. Next support is seen at $25.00 and then at last week’s low of $24.735.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com