Gold Hits 3-Wk High, Lifted By Dovish Draghi, Depreciating Dollar

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(Kitco News) - Gold prices were ending the U.S. day session moderately higher and scored a three-week high Thursday. The yellow metal was supported by surprisingly dovish comments on European Central Bank monetary policy by ECB President Mario Draghi, which in turn helped push the U.S. dollar index to a new 10-month low. August Comex gold was last up $3.70 an ounce at $1,245.70. September Comex silver was last up $0.058 at $16.355 an ounce.

Featured in the marketplace Thursday was the European Central Bank meeting that left its monetary policy unchanged. However, ECB President Mario Draghi at his press conference after the meeting sounded a surprisingly dovish tone on money policy, suggesting the ECB has made no plans yet, regarding rolling back any monetary policy stimulus measures. Draghi said the ECB will continue to examine EU economic data for guidance. Draghi had recently hinted he was ready to roll back some of the ECB’s easy-money policies. His comments today dashed those notions.

In overnight news, the Bank of Japan at its latest monetary policy meeting Thursday scaled back its inflation expectations to suggest its easy-money policies can remain in place longer.

Recent world economic data has suggested price inflation remains relatively subdued, after it perked up a bit a few months ago. Such hints that the world’s central banks, including the U.S. Federal Reserve, can take a very slow approach to rolling back their stimulatory monetary policies. Recent comments from Fed Chair Janet Yellen to the U.S. Congress were also deemed as favoring the dovish side of U.S. monetary policy.

The other important “outside market” on Thursday saw Nymex crude oil futures slightly lower and trading just below $47.00 a barrel. Still, recent upside price action suggests a market bottom is in place for oil. However, my bias is that crude oil prices will remain trapped in a choppy and sideways trading range between $40 and $50 a barrel in the coming months.

Technically, August gold futures prices closed nearer the session high today. Prices also scored a bullish “outside day” up on the daily bar chart today. While the gold bears still have the slight overall near-term technical advantage there are chart clues that a near-term bottom is in place. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,260.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,247.20 and then at $1,250.00. First support is seen at today’s low of $1,234.60 and then at this week’s low of $1,227.50. Wyckoff's Market Rating: 4.5

September silver futures prices closed nearer the session high and hit another two-week high today. While the silver bears still have the overall near-term technical advantage recent price action begins to suggest a near-term market bottom is in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.50 and then at $16.75. Next support is seen at today’s low of $16.11 and then at this week’s low of $15.935. Wyckoff's Market Rating: 3.0.

September N.Y. copper closed up 35 points at 271.40 cents today. Prices closed nearer the session high today. The copper bulls still have the overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 284.95 cents. The next downside price objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at today’s high of 272.30 cents and then at this week’s high of 273.75 cents. First support is seen at today’s low of 269.85 cents and then at this week’s low of 268.35 cents. Wyckoff's Market Rating: 6.0.