Gold and silver rise as traders look for a catalyst

June 10, 2021

New York (Jun 10)  Gold and silver prices are a bit higher in midday U.S. trading Thursday, near and hitting daily highs just after midday. Some more profit taking from the shorter-term futures traders was featured again today. In quieter summertime trading, the metals market bulls are awaiting some kind of spark to break the markets out of their doldrums. August gold futures were last up $2.30 at $1,896.50 and July Comex silver was last up $0.043 at $28.045 an ounce.

The U.S. economic data point of the week Thursday morning saw the consumer price index report for May come in at up 0.6%, which was a bit higher than the 0.5% rise expected. Year-on-year the CPI rose to 5.0% in May versus April’s rise of 4.7%. Today’s report falls into the camp of those who think inflation could get too hot in the coming months. On a near-term basis, the gold and silver traders are placing more emphasis on the uptick in bond yields after the CPI report, and less on the bullish implications of rising inflation down the road.

The weekly U.S. jobless claims report showed a drop in claims in the latest period, which was also deemed a bit negative for the safe-haven metals.

Global stock markets were mixed overnight, with European shares mostly flat and Asian shares mostly firmer. U.S. stock indexes are higher in midday trading, with the S&P 500 setting a record high. The global marketplace remains calm at present, amid no major geopolitical flareups in play and some typical summertime trading occurring.

What has possibly flown under the radar screen of many in the marketplace recently is the quiet, steady decline in U.S. Treasury yields, which this week dropped to more-than-three-month lows. The yield on the benchmark 10-year U.S. Treasury note is presently fetching 1.52%. Rising raw commodity prices and some supply shortages, combined with major economies busting out of their pandemic shackles, have raised the specter of rising and possibly problematic price inflation in the coming months. However, the big element that does not jibe with the steepening inflation theory is U.S. government bond yields that remain near historically low levels. The stubbornly low U.S. bond yields support the Federal Reserve’s assertions that the rising trajectory of inflation is only transitory.

The European Central Bank held its regular monetary policy meeting on Thursday. No change in monetary policy was announced and none was expected.

The marketplace will monitor the weekend meeting of the Group of Seven countries. A draft of the meeting communique shows the group will focus on its collective relations with China and Russia.

The key outside markets today see the U.S. dollar index a bit weaker. Nymex crude oil prices are slightly up and trading around $70.00 a barrel after hitting a 2.5-year high of $70.62 on Wednesday.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls still have the firm overall near-term technical advantage. A nine-week-old price uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the June high of $1,919.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at this week’s high of $1,906.90 and then at $1,919.20. First support is seen at $1,883.70 and then at today’s low of $1,871.80.

By 3:30pm EST spot gold bounced up $12 to $1,899, spot silver was up nearly 1% to $27.98.

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