Gold, silver see gains on modest safe-haven bidding
Gold and silver prices are firmer near midday today, as traders and investors have somewhat stepped up their safe-haven buying as the war in the Middle East is still running hot. Down-ticks in global government bond prices (lower yields) and higher crude oil prices today are also price-friendly for the two precious metals markets. June gold was last up $36.30 at $4,652.00. May silver prices were up $1.244 at $71.04.
The marketplace did not react much to comments from Fed Chair Powell in remarks to a Harvard audience today. Powell said interest rates “are in a good place” to react to rising oil prices. He also said inflation at present appears to be well anchored.
The Middle East war shows no solid signs of de-escalating. President Trump told the Financial Times he wants to “take the oil” in Iran, possibly seizing the export hub of Kharg Island. Trump’s interview with the FT comes as thousands of U.S. troops massed in the Persian Gulf region, including an amphibious assault team that arrived on Saturday. Portions of the 82nd Airborne is also on its way. Trump told the FT on Sunday “his preference would be to take the oil.” He compared the effort to the operation in Venezuela in January, when the U.S. captured the South American country’s leader, Nicolas Maduro, and plans to control its oil industry. Trump told FT that taking Kharg Island “would also mean we had to be there for a while.” Trump this morning posted on social media that if Iran does not reach a deal with the U.S. soon, the U.S. will start bombing key infrastructure locations.
Sovereign bond markets’ prices rose around the world as concern the Middle East war will derail world economic growth. “U.S. treasuries advanced with U.K. and Japanese bonds on speculation that surging oil prices may be just a harbinger of a protracted global fuel shortage. That’s helping boost demand for government debt that until recently had been under selling pressure as fears over quickening inflation outweighed their traditional haven appeal,” said a Bloomberg report.
The key outside markets see Nymex WTI crude oil prices higher and trading around $102.25 a barrel. The U.S. dollar index is higher today. The yield on the benchmark 10-year U.S. Treasury note is presently 4.33 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 bulls’ next upside price objective is to produce a close above solid resistance at $4,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $4,100.00. First resistance is seen at today’s high of $4,611.40 and then at $4,634.00. First support is seen at $4,500.00 and then at the overnight low of $4,444.70. Wyckoff's Market Rating: 4.0.
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 $60.00. First resistance is seen at $72.50 and then at $74.80. Next support is seen at the overnight low of $67.70 and then at $65.00. Wyckoff's Market Rating: 4.0.
