Powerful Greenback Hammers Gold and Silver Prices Below Key Support

(Kitco News)- Gold and silver prices are sharply lower in early-afternoon U.S. trading Tuesday.Gold fell to a five-month low today. Importantly, the yellow metal has fallenwell below major technical support at $1,300.00. The U.S. dollar index surgedto a five-month high today, as the currency has been a significantly bearishforce working against the precious metals bulls. June Comex gold futures werelast down $28.60 an ounce at $1,289.50. July Comex silver was last down $0.39at $16.255 an ounce.

Thegold and silver markets also saw selling pressure in reaction to the U.S.retail sales report for April, which came in at up 0.3%, which was in line withmarket expectations. The Empire State manufacturing report also came in solidtoday. Analysts deemed these reports as showing a healthy U.S. economy thatwon’t deter the Federal Reserve from continuing to raise interest rates. In fact,some market watchers are now thinking the Fed could be a bit more aggressive ontightening its monetary policy.

Addingto the upside push for the greenback today was a downbeat gross domestic productreport coming out of the Euro zone today, that helped to sink the Euro currencyagainst the dollar.

U.S.Treasury note and bond yields rose to multi-year highs today, with thebenchmark 10-year note pushing above the psychologically important 3.0% level.Rising bond yields could pull away investor demand for gold, which carries nodividend, and given the higher yearly payback the bond market is currentlyoffering. However, it can also be argued the higher bond yields suggest higherprice inflation, which could support gold (and other hard assets) should it becomeproblematic down the road.

Focusof the marketplace this week is on U.S. trade meetings with China that werescheduled to begin in the U.S. today, and a possible U.S. decision on the NAFTAtrade agreement with Canada and Mexico.

Theother key “outside market” today finds Nymex crude oil prices slightly lower, justbelow $71.00 a barrel and not far below last week’s 3.5-year high.

Technically,gold prices dropped below major psychological support at $1,300.00, to producechart damage and suggest more downside price pressure is coming. Prices are nowin a two-month-old downtrend on the daily bar chart. The gold bears now havethe overall near-term technical advantage. Gold bulls' next upside near-termprice breakout objective is to produce a close above solid technical resistanceat the May high of $1,326.30. Bears' next near-term downside price breakoutobjective is pushing prices below solid technical support at the December lowof $1,247.20. First resistance is seen at $1,300.00 and then at $1,310.00.First support is seen at today’s low of $1,289.80 and then at $1,280.00.Wyckoff's Market Rating: 4.0

Thesilver bears have regained the overall near-term technical advantage. Silverbulls' next upside price breakout objective is closing prices above solidtechnical resistance at the May high of $16.865 an ounce. The next downsideprice breakout objective for the bears is closing prices below solid support atthe May low of $16.07. First resistance is seen at $16.50 and then at today’shigh of $16.565. Next support is seen at today’s low of $16.205 and then at$16.07. Wyckoff's Market Rating: 4.0.

JulyN.Y. copper closed down 345 points at 305.80 cents today. Prices closed nearerthe session low today. The copper bulls and bears are on a level overallnear-term technical playing field amid recent choppy trading. Copper bulls'next upside price objective is pushing and closing prices above solid technicalresistance at the April high of 321.80 cents. The next downside price objectivefor the bears is closing prices below solid technical support at the March lowof 295.85 cents. First resistance is seen at today’s high of 310.30 cents andthen at this week’s high of 313.10 cents. First support is seen at today’s lowof 303.45 cents and then at the May low of 301.40 cents. Wyckoff's MarketRating: 5.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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