Gold prices down as global risk appetite upticks
New York (May 5) Gold prices are moderately lower in early U.S. trading Tuesday, as trader and investor attitudes are a bit more upbeat on this day, as seen by rallies in global stock markets. June gold futures were last down $8.40 an ounce at $1,704.80. July Comex silver prices were last up $0.094 at $14.895 an ounce.
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors early Tuesday are focused on the positives regarding local economies beginning to open back up in some major countries in Europe and North America. However, rallies in equities in the near term are likely to be tempered by eroding U.S.-China trade relations. The Trump administration has called out China’s leadership for mishandling and even concealing the Covid-19 outbreak that started in Wuhan, China. Reports this week are saying the global perception of China is now at a 30-year low. Many market watchers are wondering how China will react as it gets pushed farther into a corner by the U.S. This matter has the potential to eventually make the U.S.-China trade dispute of the past couple years look minor, and could even launch the world’s two largest economies into a “cold war” that rivals the one waged between the U.S. and Soviet Union for over four decades.
In overnight news, the March Euro zone producer price index was reported down 1.5% from February and down 2.8%, year-on-year.
The German high court on Tuesday has challenged the European Central Bank’s bond-buying authority, saying the ECB exceeded its powers. This is big news, as Germany is the workhorse of the European Union collective economy. The Euro currency fell on the news, as it once again raises questions about the long-term sustainability of the European Union during this time of “de-globalization” leanings by some countries that include the U.S. and U.K. It could be that the hard-working Germans are finally getting fed up with other EU nations and their economic woes.
The important outside markets see Nymex crude oil prices sharply higher and trading around $22.50 a barrel in June futures. The U.S. dollar index is higher today after the greenback bulls faded last week.
U.S. economic reports out Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, the international trade report, the U.S. services PMI, the ISM non-manufacturing report on business, and the IBD/TIPP economic optimism index.
Technically, the gold bulls have the overall near-term technical advantage but need to show fresh power soon to keep alive 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 $1,715.30 and then at Monday’s high of $1,726.00. First support is seen at the overnight low of $1,695.40 and then at $1,676.00.
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