Weak China Data Sinks Gold, Silver Markets

(August 8, 2023 - Jim Wyckoff)

(Kitco News) - Gold and silver prices are lower in midday U.S. trading Tuesday. The two precious metals were pressured following surprisingly weak import and export data coming out of China overnight. A rally in the U.S. dollar index and weaker crude oil prices also weighed on the metals today. December gold was last down $9.60 at $1,960.50 and September silver was down $0.437 at $22.79.

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Risk appetite receded following the news that China got some more dour economic data Tuesday, as the world’s second-largest economy saw its exports drop a worse-than-expected 14.5% in July, year-on-year, the steepest decline since the Covid period in February of 2020. Imports in July fell more than expected, down 12.4%. These poor numbers will likely prompt more Chinese central bank stimulus measures soon.

Asian and European stock markets were mostly lower in overnight trading, on the China news. U.S. stock indexes are lower at midday.

Key U.S. and China inflation reports this week are also in focus for the marketplace. The July U.S. consumer price index it out Thursday and the producer price index is out Friday. Both the CPI and PPI are expected to uptick just a bit from the June reports.

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are slightly lower and trading around $81.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 4.014%.

Technically, December gold futures bears have the overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at today’s high of $1,972.80 and then at this week’s high of $1,981.70. First support is seen at last week’s low of $1,954.50 and then at $1,950.00. Wyckoff's Market Rating: 4.0

September silver futures prices hit a four-week low today. The silver bears have the overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at today’s high of $23.255 and then at this week’s high of $23.775. Next support is seen at today’s low of $22.72 and then at $22.50.