Gold Ends Solidly Up, at 3-Wk. High, On Bullish Outside Markets

(Kitco News) - Gold ended the U.S. day session solidly higher and scored a three-week high Wednesday. The precious metals were boosted by bullish outside markets that saw higher crude oil prices and a lower U.S. dollar index. In fact, most of the raw commodity futures markets were in rally mode today, which added to the upside pressure on the metals. August Comex gold was last up $16.10 an ounce at $1,263.10. July Comex silver was last up $0.611 at $17.00 an ounce.

The greenback bears have gained downside momentum as dollar index prices hit a four-week low today. Meantime, Nymex crude oil futures prices hit a seven-month high and are trading just above $51.00 a barrel.

World stock markets were mostly weaker overnight on profit taking and on a report from the World Bank late Tuesday that said world economic growth will be 2.4% this year versus its last forecast of 2.9% growth, which was issued in January. Also downbeat was China trade data, which showed its exports were down 4.1% in May, year-on-year. U.S. stock indexes were firmer in afternoon New York dealings.

In other news, the Paris-based OECD think tank issued a report Wednesday that said world economic growth prospects will be steady in the coming months, but that’s a bit brighter outlook than the organization had in its last report.

This week, government bond yields in Germany and the U.K. fell to record lows. This is a sign that the potential for price deflation remains elevated in the Euro zone, amid heavy doses of monetary policy stimulus from the European Central Bank that have only been somewhat successful in reviving the Euro zone economy.

U.S. economic data due for release Wednesday was light and had no impact on the markets.

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Technically, August gold futures bulls have the overall near-term technical advantage and gained more power today. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,286.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,236.90. First resistance is seen at today’s high of $1,267.20 and then at $1,275.00. First support is seen at $1,250.00 and then at today’s low of 1,245.50. Wyckoff’s Market Rating: 6.5

July silver bulls have regained the overall near-term technical advantage as prices hit a three-week high today. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $15.83. First resistance is at today’s high of $17.115 and then at $17.25. Next support is seen at $16.75 and then at $16.545. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com