Gold, silver pressured by strong U.S. dollar, rising bond yields

(Kitco News) - Gold and silver prices are lower in midday U.S. trading Thursday, on downside corrections following recent good gains. A higher U.S. dollar index that hit a two-year high and rising U.S. Treasury yields that this week hit three-year highs are bearish elements that worked against the precious metals market bulls on this day. June gold futures were last down $10.50 at $1,974.20 and May Comex silver was last down $0.425 at $25.605 an ounce.

Risk aversion is a bit keener heading into a long three-day holiday weekend for many countries and that may have somewhat limited selling pressure in the safe-haven metals today. Russian President Putin has again threatened NATO with his nuclear arsenal, saying he will deploy those weapons in and around the Baltic Sea if Sweden and Switzerland join the NATO alliance.

Surging Covid cases in China remain a serious concern for the overall global economy. Bloomberg today reports Chinese President Xi Jinping "sees no alternative to a zero-tolerance approach to Covid-19 despite simmering anger in the locked-down financial hub of Shanghai and mounting costs, telling officials yesterday they must adhere to the principle of people first and life first. The outbreak has Xi, who's likely to seek a third five-year term during a Communist Party congress later this year, facing one of the biggest tests of his tenure. For many of Shanghai's 25 million residents, the restrictions have meant resorting to bartering with neighbors for basic necessities like ice cream for vegetables or wine for cake."

Meantime, China's central bank appears set to lower interest rates and reduce the reserve requirement ratio for its banks. The moves would be intended to free up more liquidity in the banking sector to help bolster the economy which has been hit by the particularly bad wave of covid.

Corporate earnings reports will be closely scrutinized by stock traders. The big news in the equities world Tuesday is Elon Musk's unsolicited offer to buy Twitter, which has stock market watchers buzzing. Global stocks markets were to firmer mixed overnight. The U.S. stock indexes are lower at midday.

Nymex crude oil futures prices are firmer at midday today and trading around $104.75 a barrel. The yield on the 10-year U.S. Treasury note is presently fetching 2.8%.

Technically, the June gold futures bulls have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close in April futures above major resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,915.00. First resistance is seen at this week's high of $1,985.80 and then at $2,000.00. First support is seen at Wednesday's low of $1,966.30 and then at $1,950.00. Wyckoff's Market Rating: 7.0

May 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 March high of $27.495 an ounce. The next downside price objective for the bears is closing prices below solid support at the March low of $24.045. First resistance is seen at $26.00 and then at $26.16. Next support is seen at Wednesday's low of $25.53 and then at $25.25. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com