Price pressure on gold and silver after the pessimistic China data

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(Kitco News) – Gold and silver prices fell in early US trade on Tuesday. Some of the weaker economic data out of China raised growing concerns about consumer and commercial demand for precious metals. Gold for June was last down $12.00 at $2010.70, and silver in July fell $0.316 at $23.975.

China, the world’s second-largest economy, saw a generally pessimistic data dump on Tuesday. Industrial production rose 5.6%, year over year, in April – below market expectations for a 10.1% growth rate. Industrial production rose 3.9% year-on-year in March. Fixed asset investment was also lower than expected at 4.7% yoy, compared to forecasts of 5.2%. China’s electricity production in March fell 8.2% year on year. Aluminum production doubled in March and steel production declined. Gas production for the month of March also declined, as did coal mine output.

Meanwhile, Comex copper futures prices are heading to a 5.5-month low. The red industrial metal has been called “Dr. Cooper” for decades. It is an important building block in global construction and thus can help forecast global demand in that key industry. The current downward trend in copper prices and a multi-month low indicates the current weakness in the global economy. This is also a bearish element for gold and silver, from a demand perspective.

Asian stock markets were mixed overnight and European stocks were mixed but mostly lower. US stock indices are showing weaker openings as the daily New York session begins. The focus today is on talks to extend the planned US debt limits. Congressional leaders and President Biden will likely meet at the White House. The US government may run out of money as soon as June 1.

The Eurozone reported GDP for the first quarter of the year by 0.1% compared to the fourth quarter and up by 1.3% year on year. These figures were in line with market expectations.

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The International Energy Agency raised global demand for crude oil for 2023 by 100,000 barrels per day, to 102 million barrels per day.

Today’s US data point is the April retail sales report, which is expected to come in at a 0.8% increase from March and compared to a 1.0% drop in the March sales report.

Today the major foreign markets see the US dollar index weaker. Crude oil prices on NYMEX are nearing stability and are trading around $71.00 a barrel. Meanwhile, the benchmark 10-year US Treasury yield is currently at 3.472%.

Other US economic data due for release on Tuesday includes the Johnson Redbook Weekly Index and retail store sales indices, industrial production and capacity utilization, the NAHB housing market index, manufacturing stocks and trade.

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. The first resistance was seen at last Friday’s high of $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. First resistance was seen at last Friday’s high of $24.405 and then $24.735. The next support appears at today’s low of $23.84, then $23.50. Wyckoff Market Rating: 5.0.