Gold, silver rally as USDX sells off
Gold and silver prices are higher near midday U.S. trading today, with gold posting solid gains and silver moderate gains. A lower U.S. dollar index at midweek, along with a dip in world government bond prices, are bullish outside-markets for the two precious metals on this day. June gold was last up $130.50 at $4,808.70. May silver prices were up $0.936 at $75.86.
The past few weeks had seen global government bond market prices sell off (rising yields) due to worries about the spike in global energy prices from the war in Iran creating problematic inflation, and in turn prompting central banks hold their interest rates steady or even tighten their monetary policies. More recently, however, bond traders’ attitudes have flip-flopped as prices this week have rallied (lower yields) due to revised notions that a prolonged war in Iran, including the associated higher energy costs, would be a significant drag on world economies—prompting central banks to lower their interest rates. So which theory is correct? The answer to that question is that at present nobody knows. What recent price action in the bond markets does once again prove is that traders and markets are fickle—even the bond traders who many consider to be the smartest guys/gals in the room.
The key outside markets see Nymex WTI crude oil prices weaker and trading around $100.00 a barrel. The U.S. dollar index is solidly lower today. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.3 percent.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, June gold futures prices are now trending higher on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $5,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,300.00. First resistance is seen at $4,850.00 and then at $4,900.00. First support is seen at $4,700.00 and then at $4,600.00. Wyckoff's Market Rating: 6.0.
May silver futures bulls see their next upside price objective is closing prices above solid technical resistance at $80.00. The next downside price objective for the bears is closing prices below solid support at the March low of $61.21. First resistance is seen at $77.50 and then at $80.00. Next support is seen at $72.00 and then at $70.00. Wyckoff's Market Rating: 5.5.
