Gold, Silver Hit With Follow-Through Selling Pressure

(Kitco News)- Goldprices are modestly lower and dropped to another five-month low in early U.S.trading Tuesday. Both gold and silver are seeing follow-through sellingpressure after strong losses posted Tuesday. June Comex gold futures were lastdown $3.30 an ounce at $1,286.80. July Comex silver was last down $0.044 at $16.225an ounce.

Thesurging U.S. dollar is a major factor working against the precious metalsmarket bulls over the past few weeks. The U.S. dollar index hit anotherfive-month high overnight. It’s important to remember that trends in thecurrency markets tend to be stronger and longer-lasting than price trends inother markets.

Thegold and silver bulls need a dose of geopolitical unrest to wrestle theirmetals away from the grip of the appreciating greenback. Their wish may begranted as it appears the U.S.-North Korea summit in June is unraveling, which isnot surprising to many. North Korea has cancelled talks with South Korea andnow says it will not completely disarm its nuclear arsenal. The U.S. has notformally responded. This development could flare up into a markets-movinggeopolitical event in the near term.

Inovernight news, the Euro zone consumer price index for April came in at up 0.3%from March and up 1.2%, year-on-year. Those numbers were in line with marketexpectations.

Japan’sfirst-quarter GDP showed a growth rate of -0.2%, which was below forecasts forno change in growth.

Attentionof the marketplace this week is also on U.S. trade meetings with China inWashington, D.C. Also, a possible U.S. decision on the NAFTA trade agreementwith Canada and Mexico could be announced late this week, but many areskeptical it will happen so soon.

Somethingelse to keep an eye on: The Turkish currency, the lira, fell to a record lowagainst the U.S. dollar overnight, which prompted the Turkish central bank toissue a warning about “unhealthy” developments in the markets. In years past,unstable secondary currency markets have produced a contagion effect in themajor currencies. This is not the case now, but it still warrants monitoring.Any tensions in the currency markets would likely prompt safe-haven demand forgold and silver.

Theother key “outside market” today finds Nymex crude oil prices weaker and near$71.00 a barrel, and not far below Tuesday’s 3.5-year high.

U.S.economic data due for release Wednesday includes the weekly MBA mortgage applicationssurvey, new residential construction, industrial production and capacityutilization, and the weekly DOE liquid energy stocks report.

Technically,June gold bears have the overall near-term technical advantage and havemomentum. Gold bulls' next upside near-term price breakout objective is toproduce a close above what is now solid technical resistance at $1,300.00.Bears' next near-term downside price breakout objective is pushing prices belowsolid technical support at the December low of $1,247.20. First resistance isseen at the overnight high of $1,296.40 and then at $1,300.00. First support isseen at $1,280.00 and then at $1,275.00. Wyckoff's Market Rating: 3.5

Julysilver futures bears have the overall near-term technical advantage. Silverbulls' next upside price breakout objective is closing prices above solidtechnical resistance at last week’s high of $16.865 an ounce. The next downsideprice breakout objective for the bears is closing prices below solid support at$16.00. First resistance is seen at today’s high of $16.345 and then atTuesday’s high of $16.565. Next support is seen at the May low of $16.07 andthen at $16.00. Wyckoff's Market Rating: 3.0.

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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