Gold, silver gain on needed upside bounces after recent sell-offs

(Kitco News) -  Gold and silver prices are higher in midday U.S. trading Monday, on upside corrections from recent selling pressure that has produced near-term chart damage in the gold market. A depreciating U.S. dollar on the foreign exchange market is a bullish “outside market” force working in favor of the metals market bulls to start the trading week. Still bearish for the safe-haven metals is upbeat trader and investor risk appetite recently that has seen money flowing into equities markets. August gold futures were last up $15.80 an ounce at $1,698.60. July Comex silver prices were last up $0.281 at $17.76 an ounce.

U.S. stock indexes are higher at midday. The Nasdaq hit a record high today, while the S&P 500 stock index hit a three-month high. Businesses in major global economies continue to reopen and that’s lifting trader and investor spirits. However, the more social interaction the past couple weeks has caused an increase in Covid-19 infections in some U.S. states. Still, that could be just because more testing for infections is being done than in weeks past. Also, the civil unrest in the U.S. has turned much less violent and by far mostly peaceful.

The marketplace today mostly shrugged off some stated reporting errors in last Friday’s shockingly upbeat U.S. employment report from the Labor Department. Those reporting errors made the report look more rosy than it would have been otherwise, but the errors were not major. Friday’s report suggested the U.S. economy will see a “V-shaped” recovery from the Covid-19 damage. “We are likely to see the shortest (U.S.) recession on record,” said one market analyst. Friday’s huge miss by analysts/economists on the jobs data in May raises questions on the accuracy of assumptions made by central banks, including the Federal Reserve, the past few months. Important questions include: What if the central banks greatly misjudged the overall damage to their economies and their recovery rates? Did the central banks severely over-react on monetary stimulus packages, which could create bigger problems (inflation) down the road?

In overnight news, economic data out of China was downbeat. China’s imports in May were down 16.7%, year-on-year. Exports were down 3.3% in the same period. There was no major U.S. economic data released today.

The important outside markets see the U.S. dollar index slightly lower early today and not far above last Friday’s 11-week low. Meantime, Nymex crude oil prices are lower after hitting a three-month high overnight, and are trading around $38.00 a barrel at midday. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.9% level. Bond yields have risen significantly the past few sessions. 

Technically, August gold futures saw a corrective bounce from recent solid selling pressure that saw prices Friday hit a six-week low and close at a technically bearish weekly low close. The bulls have the overall near-term technical advantage but have faded as a price uptrend on the daily bar chart has been negated and prices are starting to trend down. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at $1,730.00. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,650.00. First resistance is seen at today’s high of $1,701.50 and then at $1,715.00. First support is seen at today’s low of $1,680.70 and then at $1,668.40. Wyckoff's Market Rating: 6.5

July silver futures bulls have the firm 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 $17.15. First resistance is seen at $18.00 and then at $18.25. Next support is seen at last week’s low of $17.375 and then at $17.20. Wyckoff's Market Rating: 7.0.

July N.Y. copper closed up 70 points at 256.25 cents today. Prices closed nearer the session high today and hit a three-month high. The copper bulls have the firm overall near-term technical advantage. 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 265.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 235.00 cents. First resistance is seen at today’s high of 257.25 cents and then at 260.00 cents. First support is seen at today’s low of 253.05 cents and then at 250.00 cents. Wyckoff's Market Rating: 6.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com