Gold, Silver Prices Stabilize After Beatdown

(Kitco News) - Gold and silver prices are steady to slightly up in early-afternoon U.S. trading Tuesday. Earlier in the session, both metals saw follow-through selling pressure after strong losses posted Tuesday. Gold prices hit a five-month low overnight. June Comex gold futures were last up $0.60 an ounce at $1,291.00. July Comex silver was last up $0.081 at $16.35 an ounce.

The surging U.S. dollar has been a major factor working against the precious metals market bulls over the past few weeks. The U.S. dollar index hit another five-month high overnight, but had backed off its daily highs as of midday today, which lent just a bit of support to the precious metals.

The gold and silver bulls need a dose of geopolitical unrest to wrestle their metals away from the grip of the appreciating greenback. Their wish may be granted as it appears the U.S.-North Korea summit in June is unraveling, which is not surprising to many. North Korea has cancelled talks with South Korea and now says it will not completely disarm its nuclear arsenal. The U.S. has not formally responded. This development could flare up into a markets-moving geopolitical event in the near term.

Attention of the marketplace this week is also on U.S. trade meetings with China in Washington, D.C. Also, a possible U.S. decision on the NAFTA trade agreement with Canada and Mexico could be announced late this week, but many are skeptical it will happen so soon.

Something else to keep an eye on: The Turkish currency, the lira, fell to a record low against the U.S. dollar overnight, which prompted the Turkish central bank to issue a warning about “unhealthy” developments in the markets. In years past, unstable secondary currency markets have produced a contagion effect in the major currencies. This is not the case now, but it still warrants monitoring. Any tensions in the currency markets would likely prompt safe-haven demand for gold and silver.

The other key “outside market” today finds Nymex crude oil prices weaker and near $71.00 a barrel, and not far below Tuesday’s 3.5-year high.

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Technically, gold prices Tuesday dropped below what was major psychological support at $1,300.00, which has now become stiff chart resistance. Prices are in a two-month-old downtrend on the daily bar chart. The gold bears now have the overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the December low of $1,247.20, basis June futures. First resistance is seen at today’s high of $1,296.40 and then at $1,300.00. First support is seen at today’s low of $1,285.70 and then at $1,280.00. Wyckoff's Market Rating: 3.5.

The silver bears have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the May high of $16.865 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at $16.50 and then at Tuesday’s high of $16.565. Next support is seen at today’s low of $16.19 and then at $16.07. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed up 120 points at 306.80 cents today. Prices closed nearer the session high today. The copper bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the April high of 321.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 295.85 cents. First resistance is seen at Tuesday’s high of 310.30 cents and then at this week’s high of 313.10 cents. First support is seen at this week’s low of 303.45 cents and then at the May low of 301.40 cents. Wyckoff's Market Rating: 5.0.