Gold Rebounds After Weak Data Hits U.S. Dollar Index

(Kitco News) - Gold prices ended the U.S. day session higher and nearer the daily high Tuesday. A lower U.S. dollar index prompted some short covering in the gold futures market and some bargain hunting in the cash gold market. December Comex gold was last up $4.70 an ounce at $1,346.00. September Comex silver was last up $0.045 at $19.85 an ounce.

A weaker-than-expected second-quarter U.S. productivity report pressured the U.S. dollar index today, which in turn helped to lift the precious metals up from their daily lows. Second-quarter productivity in the U.S. declined by 0.5%--for the third consecutive quarter of declines and the longest decline streak since 1979. This report falls into the camp of the U.S. monetary policy doves, who do not want to see U.S. interest rates rise any time soon.

World stock markets were mostly higher overnight, boosted in part on reports the OPEC oil cartel will hold an informal meeting in late September. Equities were supported on ideas OPEC could move at that time to curtail their crude oil production levels. Crude oil prices are in a two-month-old slump and last week briefly dropped below $40.00 a barrel.
U.S. stock indexes were higher in afternoon New York trading.

In other overnight news, China’s producer price index was reported down 1.7% in July, year-on-year, versus a decline of 2.6% in June. The July number was deemed better than expected.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, December gold futures prices closed near mid-range. The gold bulls have the overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,384.80. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the July low of $1,318.50. First resistance is seen at $1,350.00 and then at $1,360.00. First support is seen at this week’s low of $1,335.30 and then at $1,325.00. Wyckoff’s Market Rating: 6.5

September silver futures prices closed nearer the session high. The silver market bulls have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the July high of $21.225 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $20.00 and then at $20.25. Next support is seen at this week’s low of $19.515 and then at $19.27. Wyckoff's Market Rating: 6.5.

September N.Y. copper closed down 145 points at 215.05 cents today. Prices closed near mid-range and hit a four-week low today. The copper bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the July high of 227.75 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the July low of 211.65 cents. First resistance is seen at today’s high of 216.50 cents and then at this week’s high of 218.10 cents. First support is seen at today’s low of 214.00 cents and then at 211.65 cents. Wyckoff's Market Rating: 4.0.

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