Gold erases early losses as U.S. in the vise of two crises

(Kitco News) -  Gold is slightly up in midday U.S. dealings Monday, as the bulls stepped in to buy the early dip in prices. Silver prices are solidly up today and hit a more-than-three-month high near $19.00. Major civil unrest has exploded across major U.S. cities, over racial inequality, at the same time the U.S. economy has been staggered by the Covid-19 pandemic. August gold futures were last up $1.90 an ounce at $1,753.60. July Comex silver prices were last up $0.331 at $18.83 an ounce.

Global stock markets were mixed in overnight trading. U.S. stock indexes were modestly up at midday, in a surprisingly muted markets reaction to the new civil unrest in the U.S. 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. You can bet that come U.S. elections in November, the apparent disconnect between Wall Street and what’s transpiring in the rest of the U.S. will be a major topic of discussion.

In other news, reports Monday said China has reportedly 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. However, some are disputing the accuracy of those reports on the matter. This follows the move by President Trump on Friday 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 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%. 

Technically, August gold futures were up $1.00 at $1,752.70 in midday trading today. Prices were nearer the session high. Recent price action suggests prices will drift sideways to higher in the near term. The bulls have the solid overall near-term technical advantage. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,789.00. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,761.00 and then at $1,775.00. First support is seen at today’s low of $1,737.60 and then at $1,725.00. Wyckoff's Market Rating: 7.5

July silver futures were up $0.306 at $18.805 at midday today. Prices were nearer the session high and hit a nearly three-month high. The silver bulls have the solid overall near-term technical advantage and gained more power today. 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 $17.15. First resistance is seen at today’s high of $18.95 and then at $19.075. Next support is seen at today’s low of $18.455 and then at $18.165. Wyckoff's Market Rating: 8.0.

July N.Y. copper closed up 470 points at 247.30 cents today. Prices closed near the session high today and hit a six-week high. The copper bulls have the overall near-term technical advantage and gained fresh power today. Prices are in a 2.5-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 260.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 230.20 cents. First resistance is seen at today’s high of 247.75 cents and then at 250.00 cents. First support is seen at today’s low of 242.35 cents and then at 240.00 cents. Wyckoff's Market Rating: 6.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com