Gold, silver prices down, following global stock market sell-off

(Kitco News) - Gold and silver prices are solidly lower in early U.S. trading Monday. On this day traders appear more focused on the bearish prospects of reduced consumer demand for precious metals due to hobbled economies, than on their safe-haven aspects. August gold futures were last down $22.70 an ounce at $1,714.50. July Comex silver prices were last down $0.297 at $17.185 an ounce.

Global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Traders and investors are risk averse to start the work week, as there are growing signs that the Covid-19 pandemic is making a resurgence. Reports said parts of Beijing are on lockdown again, with cases in some U.S. states also on the rise as businesses reopen and American citizens become more lax on social distancing. Reported cases in the U.S. have now risen above 2 million.

There are also growing notions that the global stock market rebounds have come too far, too fast, given the actual economic conditions in the major industrialized countries at present. The general and even many in the investing public are asking, “How could the Nasdaq stock index hit a record high last week when U.S. unemployment has surged to around 15% and much of the economy remains crippled?”

The U.S. economic highlight of the week will be Fed Chairman Jerome Powell’s two days of congressional testimony on Tuesday and Wednesday for his semi-annual economic report to Congress. He may provide more clarity on the Fed’s bond buying and other monetary policy moves. Traders will monitor to see if his comments expand on his sober assessment of the U.S. economy last week.

In other overnight news, Euro zone April exports were reported down 24.5% and imports were down 13%.

The important outside markets early today see the U.S. dollar index weaker. The greenback remains in a steep downtrend. Meantime, Nymex crude oil prices are lower and trading around $35.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.

U.S. economic data due for release Monday includes the Empire State manufacturing survey and Treasury international capital data.

Technically, the gold bulls have the firm overall near-term technical advantage amid choppy and sideways trading at higher levels. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,761.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,725.00 and then at the overnight high of $1,743.80. First support is seen at the overnight low of $1,711.00 and then at $1,700.00. Wyckoff's Market Rating: 7.0

July silver futures bulls have the overall near-term technical advantage but are now fading. Silver bulls' next upside price objective is closing prices above solid technical resistance at last week’s high of $18.405 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 the overnight high of $17.63 and then at Friday’s high of $17.87. Next support is seen at $17.00 and then at $16.75. Wyckoff's Market Rating: 6.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com