Gold, silver hit by heightened recession worries
Gold prices are lower and silver prices sharply lower in midday U.S. dealings Thursday. Some fresh banking jitters and weaker U.S. economic data today have rekindled concerns about an economic recession being on the horizon. Gold and silver market bulls are somewhat frustrated their metals are not performing better due to safe-haven demand amid the keener marketplace uncertainty. However, at least on this day it appears metals traders are more focused on the bearish weaker consumer and commercial demand implications a U.S. and/or global recession would have on metals markets. June gold was last down $17.10 at $2,020.10 and July silver was down $1.283 at $24.37.
Today’s producer price index report for April came in at up 0.2%, versus expectations for up 0.3% from March, and compares to a drop of 0.5% in the March report, month-on-month. Gold prices initially were given a modest boost after the tamer PPI print.
However, the weekly U.S. jobless claims report showed claims jumped higher than expected in the latest week, at up 264,000 versus the forecast rise of 245,000. That report, combined with PacWest bank shares dropping sharply after reports that deposits dropped 9.5% last week, unsettled the marketplace and reignited recession fears. The U.S. dollar index and U.S. Treasuries saw better demand today, on safe-haven bids. Still, it’s my bias that gold and silver will see better safe-haven demand if the banking turmoil heats up in the near term.
Global stock markets were mostly firmer overnight. U.S. stock indexes are mixed at midday. Traders and investors are still monitoring the U.S. debt-limit-extension rhetoric coming from lawmakers. President Biden meets with congressional leaders again Friday, after little progress was made in a meeting earlier this week. U.S. Treasury Secretary Yellen said it’s doubtful the Biden administration could avoid a government default without Congress agreeing on a plan to deal with the debt matter.
The Bank of England met Thursday on its monetary policy, with the BOE raising its main interest rate by 0.25%, as expected.
The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are lower and trading around $71.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.3%–down following the PPI and jobless claims data.
Technically, June gold futures bulls still have the solid overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,085.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,980.00. First resistance is seen at today’s high of $2,047.60 and then at this week’s high of $2,056.00. First support is seen at $2,007.00 and then at $2,000.00. Wyckoff's Market Rating: 7.5.
July silver futures prices hit a five-week low today and bulls have faded. A price uptrend on the daily chart has been negated. The silver bulls do still have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April and May high of $26.435. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $24.735 and then at $25.00. Next support is seen at $24.00 and then at $23.75. Wyckoff's Market Rating: 6.5.
July N.Y. copper closed down 1,490 points at 369.20 cents today. Prices closed near the session low and hit a 5.5-month low today. The copper bears have the overall near-term technical advantage and gained more power today. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 350.00 cents. First resistance is seen at 375.00 cents and then at 380.00 cents. First support is seen at 365.00 cents and then at 360.00 cents. Wyckoff's Market Rating: 3.0.
By
Jim Wyckoff
For Kitco News
Tim Moseley