Easing Geopolitical Concerns Sink Gold Prices

(Kitco News) – Gold prices are solidly lower but off their overnight lows in early U.S. trading Monday. Weekend geopolitical events have assuaged the world marketplace and have pushed global stock markets higher. That’s bearish for safe-haven gold. August gold futures were last down $17.90 an ounce at 1,395.10. July Comex silver prices were last down $0.008 at $15.245 an ounce.

Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. indexes today are at or near record highs amid the keener risk appetite among traders and investors worldwide.

The weekend Group of 20 meetings taking place in Japan featured a face-to-face meeting between U.S. President Trump and Chinese President Xi regarding their trade war. That meeting saw the U.S. back off on some of its threatened sanctions, while China said it would buy more U.S. agricultural products, and both sides agreed to restart trade negotiations. This was deemed a positive by the marketplace, but most agree much heavy lifting needs to be done to get a complete and final U.S.-China trade agreement.

Also, President Trump made a surprise visit to North Korea over the weekend and met with North Korean leader Kim Jong Un. The U.S. and North Korea said they would resume talks on North Korea’s nuclear program.

China’s June official purchasing managers’ index (PMI) came in at 49.4 points, unchanged from May and in contraction territory. Expectations had been the number would inch higher to 49.5. The reading reflected slowing factory output and new orders.

There was a mixed bag of economic data coming out Europe Monday. The Euro zone May unemployment rate dropped to 7.5%, which is the lowest in over 10 years. However, U.K. manufacturing growth was the slowest in six years. The Eurozone manufacturing purchasing managers index (PMI) came in at 47.8 in June, which was just a bit better than expectations, but any PMI reading below 50.0 suggests contraction in the sector.

The key “outside markets” today see Nymex crude oil prices solidly higher, hitting a five-month high and trading around $60.00 a barrel. The OPEC oil cartel over the weekend reached a deal to keep its production curtailed. Meantime, the U.S. dollar index is higher in early U.S. trading.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, the global manufacturing PMI and construction spending.

Technically, the gold bulls still have the overall near-term technical advantage but need to step up and show power this week to keep alive a four-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the June high of $1,442.90. Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,363.00. First resistance is seen at the overnight high of $1,401.90 and then at $1,408.60. First support is seen at the overnight low of $1,384.70 and then at $1,380.00. Wyckoff’s Market Rating: 6.5.

July silver futures bulls have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart, but now just barely. Bulls need to show fresh power soon to keep the uptrend alive. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.625. First resistance is seen at $15.355 and then at the June high of $15.555. Next support is seen at the overnight low of $15.09 and then at $15.00. Wyckoff’s Market Rating: 6.0.

By Jim Wyckoff
For Kitco News

Contact jwyckoff@kitco.com

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