Profit-taking price pressure on gold and silver

 New York  (May 11)  Gold and silver prices are lower and hitting daily lows in early morning U.S. trading Tuesday. The metals are seeing some routine profit-taking from the shorter-term futures traders after recent good gains pushed the markets to multi-week highs. June gold futures were last down $9.90 at $1,828.00 and July Comex silver was last down $0.157 at $27.33 an ounce.

Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, led by the technology sector. Some so far just routine profit-taking pressure is seen in the indexes that have been trending higher. Some market analysts are blaming worries about problematic inflation for the pullback in stock markets this week. The U.S. consumer price index is out on Wednesday morning and will be closely scrutinized. Forecasts call for April CPI to be up 0.2% from March and up 3.6%, year-on-year.

While the major economies of the West have not yet been reporting inflation numbers that are concerning, China has just reported its producer prices climbed at the fastest pace in 3.5 years in April, reflecting a big rise in input costs. Producer prices rose 6.8%, year-on-year in April, up from 4.4% in March. China’s consumer price index increased 0.9% year-on-year in April, with demand continuing to improve compared to a 0.4% reading recorded in March. Meantime, China’s central bank raised the yuan currency fix against the U.S. dollar to 6.4254, giving some relief to importers of commodities. Around 100 steel mills in China have raised their prices, reflecting strong demand and rising iron ore prices. The rise in steel prices may threaten a range of downstream industries.

Remember that history shows hard assets like the metals tend to see their prices perform better during times of rising inflationary pressures.

In other news, the closely watched German ZEW economic expectations index for May came in at 84.4 versus 70.7 in April and forecasts for a reading of 71.0.

The key outside markets today see the U.S. dollar index weaker and trading not far above Monday’s 2.5-month low. Meantime, Nymex crude oil prices lower and trading around $64.30 a barrel. The U.S. Colonial pipeline system that has been shut down due to a cyberattack is set to reopen temporarily. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.606%.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the NFIB small business index. Some Federal Reserve officials are speaking today.

Technically, June gold futures bulls have the firm overall near-term technical advantage amid a six-week-old price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,881.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at this week’s high of $1,846.30 and then at $1,850.00. First support is seen at $1,818.00 and then at $1,800.00.

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