Gold prices up on safe-haven bid amid rising China tensions

New York (May 22)  Gold and silver prices are trading higher in early U.S. dealings Friday, on safe-haven buying after fresh developments in China have sapped investor and trader risk appetite heading into a long U.S. holiday weekend. June gold futures were last up $15.50 an ounce at $1,737.70. July Comex silver prices were last up $0.276 at $17.645 an ounce.

Global stock markets were also mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. U.S.-China tensions remain high. A new geopolitical element thrown into the mix is China’s threat to impose new national security laws in Hong Kong to thwart protesters there. Hong Kong’s main stock index, the Hang Seng, saw its worst day in nearly five years Friday—down over 5%.

China began its most important political event of the year late this week, the National People’s Congress. At the meetings Friday, Chinese officials said they won’t issue guidance on 2020 economic growth, acknowledging the severe economic damage inflicted on the world’s second-largest economy. Chinese authorities also implied that any more monetary policy stimulus may not be in the works, suggesting more pain for Chinese consumers. This news spooked the global marketplace and helped to sink stock markets and the crude oil markets overnight.

In other news, the Covid-19 pandemic is seeing an alarming rise of cases in some countries, while North America and Europe appear to be “flattening the curve” of the rate of infections.

The important outside markets see the U.S. dollar index solidly up early today on safe-haven demand. Nymex crude oil prices are sharply lower and trading around $32.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.67%. 

There is no major U.S. economic data due for release Friday.

Technically, the gold bulls have the solid overall near-term technical advantage amid an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,666.20. First resistance is seen at the overnight high of $1,742.00 and then at $1,750.00. First support is seen at this week’s low of $1,715.30 and then at $1,700.00.


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