Gold silver price see routine pullbacks after surging to 3.5 month high

By Jim Wyckoff - Kitco News

Gold and silver prices are lower in early morning U.S. trading Wednesday, on routine downside corrections in uptrends and after hitting 3.5-month highs Tuesday. Once again, don’t be surprised to see the gold and silver market bulls step in to buy the overnight dips and do some perceived bargain hunting. June gold futures were last down $12.30 at $1,869.10 and July Comex silver was last down $0.175 at $27.85 an ounce.

Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. There is keener risk aversion in the marketplace late this week. Traders and investors are debating when the Federal Reserve will rein in its very easy monetary policy, following the FOMC minutes on Wednesday afternoon that contained included wording on the FOMC committee discussing tapering its bond-buying program when economic conditions warrant such—but not yet.

At the last FOMC meeting in late April, the Fed still believed rising inflation was transitory. And price action this week in several raw commodity markets makes the case for the Fed being correct on that assumption. Crude oil prices have backed well down from a two-month high scored earlier this week, copper prices have pulled back from a 10-year high and the grain futures markets have swooned. Iron ore prices in Asia are also dropping, while U.S. lumber futures have dropped over 25% from their highs seen recently.

Still, there are many veteran market watchers, including this one, that believes the inflation genie is already out of the bottle, to suggest generally rising consumer and producer prices for some time to come—and likely inflation that is problematic.

Bitcoin and other cryptocurrencies have stabilized Thursday after a huge sell-off Wednesday that was precipitated by China stating it will not allow payment for goods and services to be conducted with Bitcoin. Wednesday’s price action in cryptos reminds of the time-tested notion that major bull markets many times end when the rules of the game are changed.

The crypto world should indeed shudder when the globe’s largest population and second-largest economy that is state-controlled sees its leadership take a major step toward nullifying cryptos’ authenticity.

The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are lower and are trading around $62.50 a barrel. Crude oil has sold off sharply this week, in part on reports heretofore sanctioned Iranian crude oil may be coming back onto the world market. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.659%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.

Technically, June gold futures bulls have the firm overall near-term technical advantage amid a seven-week-old price uptrend in place on the daily bar chart.

Bulls’ next upside price objective is to produce a close above solid resistance at $1,900.00.

Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,808.40.

First resistance is seen at the overnight high of $1,879.50 and then at this week’s high of $1,891.30. First support is seen at the overnight low of $1,864.20 and then at Wednesday’s low of $1,852.20. Wyckoff's Market Rating: 6.5.

The silver bulls have the firm overall near-term technical advantage amid a seven-week-old price uptrend in place on the daily bar chart.

Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $30.00 an ounce.

The next downside price objective for the bears is closing prices below solid support at last week’s low of $26.78.

First resistance is seen at the overnight high of $28.035 and then at Wednesday’s high of $28.365. Next support is seen at this week’s low of $27.425 and then at $27.00. Wyckoff's Market Rating: 6.5.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The original article was written by Jim Wyckoff and published on Kitco News