Gold recovers from early sell off as bulls step in to buy the dip

(Kitco News) - Bull markets survive and carry on when downside price corrections in overall uptrends are perceived as value-buying opportunities and the bulls step back in. Such is the case in gold and silver today. In fact, chart action in gold futures today suggests the bears are now short-term exhausted and that prices will trend sideways to higher in the near term. Gold also erased its solid losses at the same time news broke that U.S. Secretary of State Pompeo said Hong Kong is no longer autonomous from mainland China. Such a notion raises all kinds of questions and uncertainty, such as how will Hong Kong’s citizens react to increasing mainland China rule, including any U.S. response. June gold futures were last up $0.70 an ounce at $1,706.30. July Comex silver prices were last up $0.15 at $17.745 an ounce.

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are mixed at midday. Traders and investors remain mostly upbeat at mid-week. After two months or more of being mostly quarantined the citizens of major industrialized countries are eager to get back to their pre-Covid-19 ways of life and are seeing light at the end of the tunnel. The global stock markets are trading like they expect the world’s consumers to get back to old spending habits sooner rather than later. Still, tens of millions of workers in the major global economies have been idled by the pandemic-induced closure of businesses. A significant number of lost jobs are gone for good.

Many in the general public still can’t rationalize world stock markets that have recovered so strongly in the face of many businesses that are still closed and up to 30% of countries’ workers are unemployed. One explanation is that the mammoth monetary stimulus programs from the major central banks that have pumped so much money into global financial systems is seeing a lot of that money flowing back into stock markets.

The important outside markets see the U.S. dollar index higher at midday today. Nymex crude oil prices are lower and trading around $33.35 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%. 

Technically, June gold futures see today’s price action suggesting the bears have become near-term exhausted and that prices will drift back sideways to higher in the near term. The bulls still have the overall near-term technical advantage but need to step up and show more power soon. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,666.20. First resistance is seen at $1,725.00 and then at this week’s high of $1,737.20. First support is seen at today’s low of $1,684.20 and then at the May low of $1,676.00. Wyckoff's Market Rating: 7.0

July silver futures bulls have the firm overall near-term technical advantage. A bull flag pattern has formed on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $19.07 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at $18.00 and then at the May high of $18.165. Next support is seen at today’s low of $17.225 and then at $17.00. Wyckoff's Market Rating: 7.0.

July N.Y. copper closed down 345 points at 238.40 cents today. Prices closed near mid-range today. The copper bulls have the overall near-term technical advantage. Prices are in a nine=week-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 255.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 230.00 cents. First resistance is seen at this week’s high of 243.90 cents and then at the May high of 246.80 cents. First support is seen at today’s low of 235.85 cents and then at 231.40 cents. Wyckoff's Market Rating: 6.0.