(Kitco News) – Gold and silver prices are weaker again in early U.S. trading Wednesday, on routine corrective pullbacks and some profit taking following recent solid gains that saw gold hit a record high of $2,454.20 an ounce, basis June Comex futures on Monday, and silver hit an 11-year high of $32.75 an ounce, basis July Comex futures. Bearish daily “outside market” forces are also squelching the precious metals market bulls at mid-week. The U.S. dollar index is higher and crude oil prices are lower. Meantime, U.S. Treasury yields have up-ticked today. June gold was last down $11.20 at $2,414.80. July silver was last down $0.263 at $31.815.
A Wall Street Journal report today said gold’s rally the past several months has been mostly due to buying buy central banks and especially China. The Journal said central banks of the world are starting to diversify more away from U.S. dollar-based assets that can be more easily sanctioned. The report said U.S. economic sanctions on Russia, following its invasion of Ukraine, that have helped to crimp Russia’s economy, were sort of a wake-up call for countries like China, which could also be sanctioned by the U.S. The Journal report is headlined: “Gold’s latest allure? It’s sanctions proof.”
Asian and European stock indexes were mixed to weaker overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The U.S. stock indexes are not far below their recent record highs. However, a Barrons.com story today is headlined: The market’s fear gauge is signaling trouble.” The story said the CBOE’s VIX index, which measures implied volatility, is very low at present, suggesting low fear in the marketplace. The story said “investors get greedy” during a low VIX. “History suggests something’s has to give.”
The U.S. data point of the day Wednesday, if not the week, is the afternoon release of the minutes from the last FOMC meeting of the Federal Reserve.
Another WSJ story this week is titled: “China tightens minerals grip as West fails to make headway.” The story highlights China’s stockpiling of minerals like nickel, lithium and cobalt that are critical for defense and green technology. Western countries are falling behind China is securing these minerals, said the WSJ.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are down and trading around $78.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.457%.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, and the weekly DOE liquid energy stocks report.
Technically, the gold futures bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $2,500.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,350.00. First resistance is seen at the overnight high of $2,430.50 and then at Tuesday’s high of $2,438.20. First support is seen at the overnight low of $2,408.00 and then at $2,400.00. Wyckoff’s Market Rating: 8.5.
The silver bulls have the solid overall near-term technical advantage. Prices are in a steep three-week-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing July futures prices above solid technical resistance at $35.00. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at the overnight high of $32.44 and then at this week’s high of $32.75. Next support is seen at this week’s low of $31.18 and then at $31.00. Wyckoff’s Market Rating: 8.0.
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