Gold prices weaker as traders assessing new crisis in U.S.

(Kitco News) -  Gold prices are modestly lower in early U.S. trading Monday. The safe-haven metal sees some pressure from U.S. stock indexes that are surprisingly not showing much reaction to major civil unrest that has exploded across major U.S. cities. Silver prices are posting solid gains and hit a more-than-three-month high overnight. August gold futures were last down $5.10 an ounce at $1,746.60. July Comex silver prices were last up $0.186 at $18.685 an ounce.

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Civil unrest over racial inequality that erupted in U.S. cities during the weekend has dealt another major blow to the world’s largest economy. Reports said President Trump Friday night had to take cover in a bunker at the White House due to unruly crowds gathered at the White House. With the U.S. dealing with its own civil problems, it seems even less likely mainland China will loosen its tightening grip on Hong Kong.

The protesting and rioting in major U.S. cities has called into question the timing of continued reopening of businesses that have been closed for two months due to the Covid-19 pandemic. The protesting crowds in the U.S. also prompted heightened concerns about a second wave of infections hitting in in the coming weeks. All of the above have cast a pall over traders and investors, who had been driving stock market prices higher on hopes the pandemic had peaked. Yet, U.S. stock indexes are only slightly lower heading into the New York opening.

In other news, reports Monday said China has halted its purchase of U.S. soybeans and some other U.S. ag products, in a signal that nation will no longer honor its “Phase 1” trade agreement reached with the U.S. in January. This follows the move by Trump on Friday afternoon to rescind Hong Kong’s more favorable trade status with the U.S.

China’s Caixin manufacturing purchasing managers index (PMI) came in at 50.7 in May versus 49.4 in April, and 49.6 forecast. China’s official manufacturing PMI was 50.6 in May compared to 50.8 in April and 51.1 forecast. The Euro zone May manufacturing PMI was reported at 39.4, which was in line with market expectations.

President Trump on Saturday said he will likely postpone the Group of Seven meeting that had been scheduled for mid-June in the U.S. He said he wants to add additional countries to the confab and said the current G-7 “does not represent what is going on in the world.”

The important outside markets see the U.S. dollar index lower early today and hitting a 2.5-month low overnight. Nymex crude oil prices are weaker and trading around $35.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.66%.  

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, construction spending, and the global manufacturing PMI.

Technically, the gold bulls have the firm overall near-term technical advantage and are keeping alive a price uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the April high of $1,789.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,668.40. First resistance is seen at $1,750.00 and then at the overnight high of $1,761.00. First support is seen at the overnight low of $1,740.80 and then at $1,725.00. Wyckoff's Market Rating: 7.5

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 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 the overnight high of $18.95 and then at $19.075. Next support is seen at $18.165 and then at $18.00. Wyckoff's Market Rating: 8.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com