Gold Sharply Down, at 5-Mo. Low, Prices Drop Below $1,300

(Kitco News)- Gold prices are sharplylower and fell to a nearly five-month low in early U.S. trading Tuesday.Importantly, the yellow metal has fallen below major technical support at$1,300.00. The drop below that key level set off a large number of pre-placedsell stop orders in the futures market, to drive prices still lower. The U.S.dollar index has resumed its trek north today, which is, and has been, a significantlybearish force working against the precious metals bulls. JuneComex gold futures were last down $21.20 an ounce at $1,296.60. JulyComex silver was last down $0.37 at $16.275 an ounce.

Thegold and silver markets saw increased selling pressure in reaction to the U.S.retail sales report for April, which came in at up 0.3%, which was in linewith market expectations. The Empire State manufacturing report also came insolid. Analysts deemed the reports as showing a healthy U.S. economy that won'tdeter the Federal Reserve from continuing to raise interest rates.

Worldstock markets were mostly lower overnight. U.S. stock indexes are pointedtoward lower openings when the New York day session begins, and are trading neartheir daily lows after the solid U.S. economic data was released.

Thebenchmark 10-yearU.S. Treasury note sees its yield back above 3.0% today.

Adownbeat economic growth report from the European Union helped to weigh onequities. First-quarter Euro zone GDP growth came in at up a paltry 0.4%--downfrom the 0.7% growth rate (quarter-on-quarter) seen in the fourth quarter oflast year. Year-on-year 1Q GDP was up 2.5%.

Therewas a mixed bag of economic data coming out of China today. Industrial outputwas up more than expected, but retail sales were down more than expected.

Focusof the marketplace this week is on U.S. trade meetings with China that arescheduled 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 higher, above $71.00a barrel and near last week’s 3.5-year high.

OtherU.S. economic data due for release Tuesday includes the weekly Goldman Sachsand Johnson Redbook retail sales reports, the Empire State manufacturingsurvey, the NAHB housing market index, and manufacturing and trade inventories.

Technically,June gold bears have gained the overall near-term technical advantage. Goldbulls' next upside near-term price breakout objective is to produce a closeabove solid technical resistance at last week’s high of $1,326.30. Bears' nextnear-term downside price breakout objective is pushing prices below solidtechnical support at $1,300.00. First resistance is seen at $1,310.00 and thenat today’s high of $1,314.70. First support is seen at $1,300.00 and then at $1,290.00.Wyckoff's Market Rating: 4.0

Julysilver futures bears have also regained the overall near-term technicaladvantage. Silver bulls' next upside price breakout objective is closing pricesabove solid technical resistance at last week’s high of $16.865 an ounce. Thenext downside price breakout objective for the bears is closing prices belowsolid support at $16.00. First resistance is seen at today’s high of $16.565and then at this week’s high of $16.76. Next support is seen at $16.25 and thenat $16.185. Wyckoff's Market Rating: 4.0.

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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