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(Kitco News) – Gold and silver prices fell sharply in early US trading on Thursday, with gold hitting a nine-week low and silver a two-month low, on the heels of better US economic data falling into the camp of US monetary policy hawks. The rise in the US dollar index and the rise in US Treasury yields are bearish factors outside the market that work against the precious metals on this day. Gold for June was last down $20.90 at $1,944.10, and silver in July was down $0.235 at $23.00.
The second estimate just released for US Q1 GDP came in better than expected, rising 1.3% against expectations of 1.1% and compares to the first reading of GDP at 1.1%. The weekly jobless claims in the US also came in much lower than market expectations.
Asian and European stock markets were mixed overnight. US stock indices are showing mixed to firmer openings as the daily New York session begins. The market became more concerned as US lawmakers and the Biden administration failed to reach an agreement to extend the government debt limit. However, Speaker McCarthy said moments ago that negotiators are making some progress on this matter. This is also likely to add some selling pressure to the safe-haven gold and silver markets. US Treasury Secretary Yellen said the government could run out of money by June 1.
It was reported that the credit rating agency Fitch is watching the United States for a possible downgrade of the credit rating. “Fitch still expects a resolution of the debt limit before the tenth date (June 1),” the credit agency said in a report. Both Fitch and Moody’s currently rate the US debt at AAA and Aaa, respectively, while S&P has rated it at AA+ after a downgrade in 2011 amid debt ceiling negotiations during that time.
In other overnight news, the German economy, the backbone of the European Union, slid into recession in the first quarter. German GDP for the first quarter was revised down to -0.3%. The German economy contracted by 0.5% in the fourth quarter of 2022.
Today, major overseas markets see the US Dollar Index rally and reach another two-month high overnight. Crude oil prices are down on NYMEX and trading around $73.25 a barrel. Meanwhile, the benchmark 10-year US Treasury yield is currently at 3.784%.
Other US economic data due for release on Thursday includes the Chicago Fed’s National Activity Index, pending home sales, and the Kansas City Fed Manufacturing Survey.
Technically, the gold futures bulls have the overall near-term technical advantage but have faded recently. Prices have reached a nine-week low and are heading down on the daily bar chart. The next upside price target for the bulls is to achieve a close in the June futures contract above the strong resistance at $2,000.00. The bears’ next bearish price target in the near term is pushing futures prices below the strong technical support level at $1,900.00. We notice the first resistance at $1,965.40 of the day’s high and then this week’s high of $1,987.90. The first support appears at $1,935.00 and then $1,925.00. Wyckoff Market Rating: 6.0
The Silver Bears have the overall technical advantage in the near term. The price hit a 2-month low overnight and is heading lower on the daily chart. The next upside price target for the silver bulls is for the July futures price to close above the strong technical resistance at $24.50. The next downtrend price target for the bears is to close the price below the strong support level at $22.00. Initial resistance is seen at the overnight high of $23.26 and then Wednesday’s high of $23.655. The next support appears at $22.75 and then $22.50. Wyckoff Market Rating: 4.0.
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