Gold prices are lower, and silver prices are holding steady in early U.S. trading on Wednesday. The precious metals markets are reacting to bearish comments from Minneapolis Fed President Neel Kashkari, who emphasized a hawkish stance on U.S. monetary policy. Kashkari stated that U.S. interest rates will remain steady as long as necessary and could be raised if needed. June gold was last down $14.90 at $2,341.60, while July silver was slightly down $0.007 at $32.13.

Market Context:

Asian and European stock indexes were mixed to weaker overnight, and U.S. stock indexes are expected to open lower when the New York session begins.

On Tuesday, silver prices surged, challenging an 11-year high. Frank Watson of Kinesis highlighted silver’s dual role as both a precious and industrial metal, benefiting from strong economic growth and high inflation. This environment boosts precious metals as a hedge against rising costs and aligns with market expectations of interest rate cuts later this year, reducing the opportunity cost of holding non-interest-bearing assets.

This week is busy with U.S. economic data releases, including Friday’s personal income and outlays report, which features the closely watched PCE inflation indexes.

Global Economic Indicators:

The Chinese yuan has weakened to its lowest level against the U.S. dollar since last November, with Chinese authorities refraining from intervention. Similarly, the Japanese yen, Thai baht, and Indonesian rupiah are at multi-year lows. Broker SP Angel noted that China might be increasing its reserves of both base metals like copper and zinc and precious metals like silver and gold to mitigate the long-term impacts of a weaker currency.

In other markets, the U.S. dollar index is slightly up, Nymex crude oil prices are higher at around $80.50 a barrel, and the yield on the 10-year U.S. Treasury note has recently risen to 4.57%.

Recession Indicators:

An interesting report from the Wall Street Journal discusses the current inverted U.S. Treasury yield curve, traditionally a recession indicator. The inversion has persisted since 2019 by some measures, and there’s little indication it will end soon.

Upcoming U.S. Economic Data:

Scheduled for release on Wednesday are the weekly Johnson Redbook retail sales index, the MBA mortgage applications survey, the Richmond Fed business survey, and the Federal Reserve’s Beige Book.

Technical Analysis:

• Gold: June gold futures bulls have a near-term technical advantage but are fading. A bearish double-top reversal pattern suggests a near-term market top. Bulls aim to close above the record high of $2,454.20, while bears target a downside below $2,285.20. Immediate resistance is at $2,365.50, followed by $2,375.00. Initial support is at $2,326.30, then $2,315.00. Wyckoff’s Market Rating: 6.0.
• Silver: July silver futures bulls maintain a strong near-term technical advantage, with prices in a four-week uptrend. Bulls aim to close above $32.75, while bears target below $29.00. Immediate resistance is at $32.515, followed by $32.75. Initial support is at $31.50, then $31.00.

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