Gold a bit weaker following downbeat U.S. GDP data

Gold prices are modestly down in midday U.S. trading Thursday, in the aftermath of a major U.S. economic report that was weaker than expected and falls into the camp of those expecting a U.S. economic recession. Such a scenario would likely mean less consumer and commercial demand for metals. June gold was last down $3.40 at $1,992.80 and May silver was up $0.009 at $24.885.

First-quarter U.S. GDP growth came in lower than expected at up 1.1%, year on year, compared to expectations for a rise of 2.0%. The closely watched PCE price index of the GDP data came in hot at up 4.2%; it was expected to be up 3.7%, year-on-year, versus a rise of 3.9% in the fourth quarter. The hotter PCE number falls into the camp of the U.S. monetary policy hawks, who want the Federal Reserve to keep interest rates higher for longer, to choke off problematic inflation.

Global stock markets were mostly higher overnight. U.S. stock indexes are solidly higher at midday. Risk appetite is better Thursday, but by no means robust, following the big drop in share price of First Republic Bank earlier this week. Also, the specter of a U.S. economic recession is moving closer to the front burner of the marketplace. It could be that the growing U.S. government debt burden and congressional wrangling regarding what to do about it are also crimping investor enthusiasm. Reads a Wall Street Journal headline today: "Banking turmoil is tip of debt iceberg."

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The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are up and trading around $74.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.5%.

Technically, June gold futures bulls have the firm overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart has stalled out. Bulls' next upside price objective is to produce a close above solid resistance at the April high of $2,063.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the April low of $1,965.90. First resistance is seen at this week's high of $2,020.20 and then at $2,028.00. First support is seen at last week's low of $1,980.90 and then at $1,965.90. Wyckoff's Market Rating: 7.0

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May silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.235. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week's high of $25.435 and then at $25.71. Next support is seen at this week's low of $24.53 and then at $24.25. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 115 points at 386.50 cents today. Prices closed nearer the session high and hit a nearly four-month low early on today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 410.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 360.00 cents. First resistance is seen at 390.00 cents and then at Tuesday's high of 397.00 cents. First support is seen at today's low of 380.50 cents and then at 377.50 cents. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

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