Gold Miners ETF (GDX)

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Strong price pressure on gold, silver amid bearish "outside" forces
By: Jim Wyckoff | May 2, 2022

Gold and silver prices are sharply lower in early U.S. Trading Monday, with both notching around 2.5-month lows. The precious metals are getting hit early this week by the bearish outside market forces of a strong U.S. dollar index that is near a 20-year high, solidly lower U.S. crude oil prices and higher U.S. Treasury yields. June gold futures were last down $36.50 at $1,874.70 and May Comex silver was last down $0.40 at $22.66 an ounce.

Global stock markets were mostly lower overnight. Markets in China and Hong Kong were closed for a holiday. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes are extending April’s losses, which were the worst since the beginning of the pandemic.

Three major elements in the marketplace remain static but still prompting risk aversion among traders and investors: the Russia-Ukraine war, the Covid outbreak in China and problematic inflation around the globe.

China’s strict lockdowns to curb Covid-19 cases are taking a toll on the world’s second-largest economy and further disrupting global supply chains. China President Xi Jinping is under pressure to deliver on pledges to support economic growth. China’s manufacturing and services purchasing managers indexes (PMI)in April plunged to their worst levels since February of 2020.

The economic data point of the week in the U.S. Federal Reserve Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the Fed will raise the key U.S. interest rate by 0.5%, amid the highest inflation levels in 40 years. The monthly U.S. jobs report is also due out Friday morning.

The key outside markets today sees Nymex crude oil futures prices sharply lower and trading around $100.50 a barrel. The U.S. dollar index is solidly higher today and not far below last week’s 20-year high. The yield on the 10-year U.S. Treasury note is presently fetching 2.942%.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM report on business manufacturing, construction spending and the global manufacturing PMI.



Technically, the June gold futures bears have the overall near-term technical advantage. A downtrend line is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,935.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,890.00 and then at $1,900.00. First support is seen at the April low of $1,870.90 and then at $1,860.00. Wyckoff's Market Rating: 4.0



May silver futures bears have the solid overall near-term technical advantage. Prices are trending sharply down on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at the overnight high of $22.83 and then at $23.00. Next support is seen at $22.50 and then at $22.25. Wyckoff's Market Rating: 3.0.

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