Gold, silver pounded by strong USDX, rising bond yields, lower oil

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(Kitco News) – Gold and silver prices are solidly down in midday US trading Thursday. Gold scored an 11-month low and silver a two-year low. Rising US Treasury bond yields, a strong US dollar index and falling crude oil prices are all bearish elements working against the metals market bulls. Recession fears and the resulting reduced consumer and commercial demand for metals are also squelching the bulls. August gold futures were last down $ 28.10 at $ 1,707.50. September Comex silver futures were last down $ 0.954 at $ 18.235 an ounce.

On tap today was the US producer price index report for June, which came in hot at up 1.1% from May and up over 11%, year-on-year. The figure was expected to see a monthly rise of 0.8% following May’s reading of up 0.8% from April. Markets showed little reaction to the data, after Wednesday’s CPI report that showed about the same results — problematic price inflation.

Global stock markets were mostly down overnight. US stock indexes are lower at midday. Trader and investor risk aversion is keener late this week, following Wednesday’s US consumer price index report that ran hotter than expected at up 9.1% in June, year-on-year, and at a 41-year high.

A feature in the marketplace for some time has been the strong appreciation of the US dollar against other major currencies. Today, the US dollar index, which is a basket of six major currencies weighted against the greenback, hit another 20-year high. The significant interest rate differentials in major economies, with the US rates being higher, is prompting the so-called “carry trade” to be prominent, whereby international traders and institutions swap out their own currencies in favor of owning the US dollar. History suggests this phenomenon can remain in place for quite some time, only making the greenback stronger.



The other feature is this week’s big downdraft in crude oil futures prices, with Nymex futures overnight falling to a three-month low of $ 93.24 a barrel. January crude oil futures are now trading at $ 84 a barrel, suggesting the marketplace thinks crude prices will continue to decline in the coming months. Crude’s plunge has pulled other major commodity market prices down, too. The weakening raw commodity sector is one significant early clue that inflationary pressures have peaked.

The key outside markets today see Nymex crude oil prices lower and trading around $ 94.00 a barrel. The US dollar index is solidly higher and hit a 20-year high. The yield on the 10-year US Treasury note is fetching around 3%. The 2-year / 10-year Treasury note yield curve remains inverted and at its most inverted in 22 years. Such is a clue of impending US economic recession.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures prices hit an 11-month low early on today. Bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $ 1,750.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $ 1,650.00. First resistance is seen at $ 1,725.00 and then at today’s high of $ 1,734.80. First support is seen at today’s low of $ 1,695.00 and then at $ 1,673.30. Wyckoff’s Market Rating: 1.0.

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures prices hit another two-year low today. The silver bears have the strong overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $ 19.50 an ounce. The next downside price objective for the bears is closing prices below solid support at $ 17.00. First resistance is seen at $ 18.63 and then at $ 19.00. Next support is seen at today’s low of $ 18.01 and then at $ 17.75. Wyckoff’s Market Rating: 1.0.

September NY copper closed down 1,050 points at 321.70 cents today. Prices closed nearer the session low and hit a 1.5-year low today. The copper bears have the solid overall near-term technical advantage. A steep five-week-old 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 375.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at today’s high of 333.00 cents and then at Tuesday’s high of 345.70 cents. First support is seen at today’s low of 317.45 cents and then at 315.00 cents. Wyckoff’s Market Rating: 1.0.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and / or damages arising from the use of this publication.

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