Gold prices weaker, show muted reaction to dour U.S. GDP data
New York (Apr 29) Gold prices are trading modestly down in early U.S. trading Wednesday, following the release of U.S. economic data that not surprisingly showed sickly results. The gold market dipped a bit just after the release of the GDP data, but that was also the same time that news reports surfaced that a study showed positive results for the treatment of Covid-19, which in turn boosted the U.S. stock market. JJune gold futures were last down $3.00 an ounce at $1,719.00. May Comex silver prices were last up $0.239 at $15.41 an ounce.
It’s a big day for U.S. economic data Wednesday, starting with the advance estimate for first-quarter U.S. gross domestic product, which was just released and came in -4.8%. The number was expected to show economic growth of around -3.5% to -4.0%. Today’s number is a bad one but most agree the figure for the second quarter will be even worse.
The Federal Reserve’s Open Market Committee (FOMC) concludes its two-day meeting this afternoon with a statement on U.S. monetary policy. No changes are expected but traders will parse the statement as well as Fed Chairman Jerome Powell’s virtual press conference. Powell is expected to say the Fed “will do what it takes” to get the U.S. economy back on track.
Global stock markets were mixed in overnight trading, while the U.S. stock indexes are pointed toward firmly higher openings when the New York day session begins.
In overnight news, a Hong Kong economic official said that city-state’s economy will contract between 4-7% in 2020. Reports said mainland China will hold its annual people’s conference later in May, as a show of how that country is emerging quickly from the effects of the Covid-19 pandemic. That major conference was postponed earlier this year.
The important outside markets see Nymex crude oil sharply higher and trading around $14.25 a barrel. There is talk Nymex crude prices will again fall into negative territory when the June contract nears expiration in late May. The U.S. dollar index is weaker again today. The greenback bulls are fading this week, partly on notions other major countries’ economies are coming back to life faster than that of the U.S. The 10-year U.S. Treasury note yield is trading around 0.59% this morning—down from levels seen earlier this week.
Other U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the consumer price index, pending home sales, and the weekly DOE liquid energy stocks report.
Technically, the gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,666.20. First resistance is seen at Tuesday’s high of $1,731.90 and then at this week’s high of $1,745.80. First support is seen at the overnight low of $1,712.50 and then at this week’s low of $1,704.10.
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