Gold, silver slump after strong U.S. data rallies greenback
Gold prices are solidly lower and hit a two-week low in midday U.S. trading Thursday. Silver is down sharply, too. Modest overnight gains in both metals were erased after the release of upbeat U.S. economic data this morning that beat market expectations. August gold was last down $27.10 at $1,943.00 and September silver was down $0.645 at $24.325.
U.S. economic data Thursday morning fell squarely into the camp of the monetary policy hawks, suggesting at least one more interest rate hike may be necessary to further cool the U.S. economy and choke off problematic price inflation. The first estimate of second-quarter U.S. gross domestic product came in at up 2.4%, year-on-year, which beat market expectations for a rise of 2.0%. The internals of the GDP report were also solid. Meantime, U.S. durable goods order were reported up 4.7% in June versus expectations for a 1.5% gain. Also, weekly U.S. jobless claims came in lower than expected. The data sharply boosted the U.S. dollar index and pushed U.S. Treasury yields up—both of which are daily bearish elements for the precious metals markets.
The marketplace Thursday pretty much digested Wednesday afternoon's 25 basis-point interest rate increase from the Federal Reserve. Fed Chair Powell's remarks at his press conference were deemed not too hawkish and not too dovish and the markets showed no big reactions. Some Fed watchers are thinking the central bank is now done with its rate-hike cycle, while others think the Fed will do one more rate increase in November.
Asian and European stock markets were mostly higher in overnight trading. U.S. stock indexes are higher at midday. The indexes are at or near their highs for the year amid a summertime rally.
In other news, the European Central Bank slightly raised its main interest rate at today's monetary policy meeting, as expected.
ECB's data-dependent stance weakens euro against U.S. dollar, pushing gold prices to session lows
The key outside markets today see the U.S. dollar index sharply higher and posting its biggest daily gain in months. Meantime, Nymex crude oil prices are firmer and trading around $80.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.9%.
Technically, August gold futures prices scored a bearish outside day down today and hit a two-week low. Bulls have lost their slight overall near-term technical advantage. A three-week-old uptrend on the daily bar chart has been negated. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,900.60. First resistance is seen at $1,960.00 and then at $1,975.00. First support is seen at $1,937.50 and then at $1,925.00. Wyckoff's Market Rating: 5.0.
September silver futures prices scored a bearish “outside day” down today. The silver bulls have the slight overall near-term technical advantage but faded today. A four-week-old price uptrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $26.475. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.00 and then at today's high of $25.325. Next support is seen at today's low of $24.18 and then at $24.00. Wyckoff's Market Rating: 5.5.
September N.Y. copper closed down 290 points at 387.30 cents today. Prices closed nearer the session low today and scored a bearish outside day down. The copper bulls have the slight overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 368.30 cents. First resistance is seen at the July high of 395.40 cents and then at 396.40 cents. First support is seen at Tuesday's low of 384.45 cents and then at last week's low of 378.10 cents. Wyckoff's Market Rating: 5.5.
By
Jim Wyckoff
For Kitco News
Tim Moseley