The price of gold bounces back when covering long and bargain positions

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(Kitco News) – Gold and silver prices were firmer in early US trading on Friday, due to bargain hunting and short covering after gold hit a nine-week low, while silver hit a two-month low overnight. Weakness in the US Dollar Index and a moderate drop in US Treasury yields on this day are helping bulls in the metals market. Gold for the month of June was last up $8.70 at $1,952.40, and silver in July was up $0.39 at $23.30.

Asian and European stock markets were mixed overnight. US stock indices are pointing slightly higher at the start of the New York daily session. The attitudes of traders and investors seem a bit more optimistic to end the trading week, due to reports that US lawmakers are close to a deal to raise the US government’s debt limit. The Wall Street Journal reports that Republican and Democratic leaders are narrowing their differences and moving toward a two-year spending deal that would raise the debt limit by two years. Lawmakers hope Congress will pass the agreement next week.

One feature in the market on Thursday was the surge in Nvidia stock after its strong earnings report. Some equity analysts and fund managers say Nvidia’s stock rally is a wake-up call: Artificial intelligence (AI) will have a greater impact on global society than the advent of the Internet nearly 30 years ago.

The US data point for today is the April Personal Income and Expenditures report, including the important personal consumption expenditures (PCE) price indices. Personal income is expected to have increased by 0.4% from March. The core PCE price index rose 4.6% year-on-year, the same as seen in the March report.

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Today, major foreign markets are seeing the US Dollar Index weaken on the back of a corrective decline, after hitting a two-month high on Thursday. Crude oil prices on NYMEX are more stable and are trading around $72.25 per barrel. Meanwhile, the benchmark 10-year US Treasury yield is currently at 3.783%.

Other US economic data scheduled for release on Friday includes the Durable Goods Orders, Advanced Economic Indicators report and the University of Michigan Consumer Confidence Survey.

Technically, the gold futures bulls have the overall near-term technical advantage but have faded recently. Prices hit a nine-week low overnight 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 Thursday’s high of $1,965.40 and then this week’s high of $1,987.90. The first support is seen at the overnight low of $1,936.00 and then at $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. We see the first resistance at $23.655, then $24.00. Next support appears at $23.00 and then the overnight low at $22.785. Wyckoff Market Rating: 4.0.