Gold, silver smacked by strong USDX, rising bond yields, technical selling

Gold and silver prices are sharply lower in midday U.S. Trading Monday, with both scoring 2.5-month lows. The precious metals are getting hit early this week by the bearish outside market forces of a strong U.S. dollar index that is near a 20-year high, higher U.S. Treasury yields and chart-based selling pressure as the near-term technical have eroded significantly the past two weeks. June gold futures were last down $42.50 at $1,869.40 and May Comex silver was last down $0.42 at $22.62 an ounce.

The economic data point of the week in the U.S. Federal Reserve Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the Fed will raise the key U.S. interest rate by 0.5%, amid the highest inflation levels in 40 years. The monthly U.S. jobs report is also due out Friday morning.

The key outside markets today sees Nymex crude oil futures prices slightly lower and trading around $104.50 a barrel. The U.S. dollar index is solidly higher today and not far below last week’s 20-year high. The yield on the 10-year U.S. Treasury note is presently fetching 2.99%–the highest in nearly 3.5 years.

Global stock markets were mostly lower overnight. Markets in China and Hong Kong were closed for a holiday. U.S. stock indexes are mixed at midday. The U.S. stock indexes are trying to recover from April’s losses, which were the worst since the beginning of the pandemic.

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Three major elements in the marketplace remain static but still prompting risk aversion among traders and investors: the Russia-Ukraine war, the Covid outbreak in China and problematic inflation around the globe.

China’s strict lockdowns to curb Covid-19 cases are taking a toll on the world’s second-largest economy and further disrupting global supply chains. China President Xi Jinping is under pressure to deliver on pledges to support economic growth. China’s manufacturing and services purchasing managers indexes (PMI)in April plunged to their worst levels since February of 2020.

Technically, June gold futures prices hit a 2.5-month low today. A price downtrend is in place on the daily bar chart. Bears have the overall near-term technical advantage and gained more power today. Bulls' next upside price objective is to produce a close above solid resistance at last week’s high of $1,935.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,883.00 and then at $1,900.00. First support is seen at today’s low of $1,853.40 and then at $1,800.00. Wyckoff's Market Rating: 4.0

May silver futures prices hit nearly three-month low today. A steep price downtrend is in place on the daily bar chart. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.445. First resistance is seen at today’s high of $22.83 and then at $23.00. Next support is seen at today’s low of $22.12 and then at $22.00. Wyckoff's Market Rating: 2.5.

May N.Y. copper closed down 1,415 points at 425.35 cents today. Prices closed nearer the session low today and hit a 4.5-month low. The copper bears have the solid overall near-term technical advantage. A price 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 the December low of 411.65 cents. First resistance is seen at 430.00 cents and then at today’s high of 438.55 cents. First support is seen at today’s low of 419.00 cents and then at 415.00 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

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