Steady price action in gold and silver as US debt reduction talks approach

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(Kitco News) – Gold and silver prices are trading near unchanged levels on the day in early US trade on Monday. Traders await fresh fundamental inputs as a data-packed week approaches, including negotiations aimed at preventing the US government from defaulting on its debt obligations. Gold for June was last up $0.20 to $2020.00, and silver in July was up $0.031 to $24.185.

The focus this week is on talks to extend the US debt limit between the White House and Congress. Reports said congressional leaders and President Biden are likely to meet on Tuesday. The US government may run out of funds as soon as June 1st. US Treasury Secretary Yellen said over the weekend that there is progress between Democrats and Republicans, in order to avert a fiscal disaster as the US government defaults on its debt obligations.

Global stock markets were mixed to stronger overnight. US stock indices are pointing to firmer openings when the daily New York session begins.

On the evening news, two gold mining companies are set to merge, with Newmont Mining buying Australia’s Newcrest Mining, to make the largest gold mining purchase ever and create the largest gold mining operation in the world.

China’s central bank said on Monday that China’s economic growth in the second quarter will pick up sharply and that inflation levels will remain low due to lower demand. In other news, Eurozone industrial production for the month of March fell 1.4% year-on-year, which was more than expected. The European Union expects annual inflation in the eurozone to reach 5.8% in 2023, up from 5.6% in its previous forecast.

Today the major overseas markets see the US dollar index slightly weaker. Crude oil prices on NYMEX are more stable and are trading around $70.25 per barrel. Meanwhile, the benchmark yield for the 10-year US Treasury note is currently at 3.485%.

US economic data due for release on Monday is light and includes the Empire State Manufacturing Survey and Treasury International Capital data.

Technically, the gold futures bulls have a strong overall technical advantage in the near term. The next bullish price target for the bulls is to achieve a close in the June futures contract above the strong resistance at the May high of $2,085.40. The bears’ next bearish price target in the near term is pushing futures prices below the strong technical support level at $1,980.00. We notice the first resistance at Friday’s high at $2,027.80 and then at $2,040.00. The first support appears at last week’s low at $2,005.70 and then $2,000.00. Wyckoff Market Rating: 7.5

The bulls and silver bears are leveling the overall technical playing field in the near term. The next upside price target for the silver bulls is for the July futures price to close above the strong technical resistance at $25.00. The next downtrend price target for the bears is to close the price below the strong support level at $23.00. We see first resistance at Friday’s high of $24.405 and then $24.735. The next support is seen at last week’s low at $23.91 and then $23.50. Wyckoff Market Rating: 5.0.