Gold, silver sink to 2.5-mo. lows as risk appetite robust

(Kitco News) - Gold and silver prices are solidly lower in midday U.S. trading Tuesday and fell to 2.5-month lows. The safe-haven metals are being pressured by bearish near-term technical charts and not much risk aversion in the marketplace at present. August gold futures were last down $17.80 at $1,763.00 and September Comex silver was last down $0.364 at $25.89 an ounce.

The U.S. stock indexes are higher at midday and the Nasdaq and S&P 500 hit new record highs today. It appears the summertime doldrums have arrived early this year, as the marketplace is generally quiet, has set aside inflation and potential pandemic resurgence concerns, with many traders seemingly more interested in family outings and vacations as the Independence Day holiday approaches.

Still, many wonder if there will be a reckoning for the U.S. at some point down the road. A Wall Street Journal story this week is entitled, "Americans are buying, buoyed by savings and federal stimulus during the pandemic." The first sentence of the story reads, "A gusher of money is spilling out from the U.S. economy and rippling around the world, driving the global recovery to an extent it hasn't in decades and giving confidence to businesses to invest in meeting the huge American demand." In Economics 101 we learned the saying, "there is no free lunch." So many veteran market watchers are now asking the question, How and when will Americans pay the piper?" The answer may be problematic price inflation down the road.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil futures are firmer and trading around $73.30 a barrel after hitting a 2.5-year high of $74.45 Monday. Energy traders are awaiting Thursday's OPEC meeting. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 1.482%.

Traders are awaiting Friday morning's employment situation report for June from the Labor Department—arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 700,000 compared to a rise of 559,000 in May. The unemployment rate is seen at 5.6% versus 5.8% in May.

Technically, the gold bears have the firm overall near-term technical advantage and gained more power today. A five-week-old price downtrend is in place on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today's high of $1,779.20 and then at this week's high of $1,786.10. First support is seen at today's low of $1,750.10 and then at $1,735.00. Wyckoff's Market Rating: 3.5

The silver bears have the firm overall near-term technical advantage. A five-week-old price downtrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $25.00. First resistance is seen at last week's high of $26.415 and then at $26.59. Next support is seen at today's low of $25.58 and then at $25.25. Wyckoff's Market Rating: 3.5.

September N.Y. copper closed down 100 points at 426.85 cents today. Prices closed near the session high today. The copper bulls have the slight overall near-term technical advantage. However, a six-week-old downtrend is in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 450.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 400.00 cents. First resistance is seen at last week's high of 433.55 cents and then at 435.00 cents. First support is seen at today's low of 420.30 cents and then at the June low of 409.40 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com