Gold Stabilizes, Silver Rallies As Greenback Backs Off

(Kitco News) - Gold prices are holding slight gains in early-afternoon U.S. trading Thursday, while silver is posting a solid rally. Both markets are seeing correctives rebounds after gold hit a nearly 1.5-year low and silver scored a two-year low earlier today. The U.S. dollar has backed off a bit from its 14-month high scored on Wednesday, while crude oil prices are seeing a modest rally today. This has allowed buyers to step back into the silver market in good fashion, but come in with some trepidation in the gold market. December gold futures were last up $0.90 an ounce at $1,186.00. September Comex silver was last up $0.296 at $14.75 an ounce.

Gold and silver prices in overnight trading spiked to their new lows, but then moved up from theme. If gold and silver prices can finish the day Thursday nearer their daily highs, and see some follow-through buying on Friday, such would suggest the bears have run out of gas and that near-term market bottoms are in place.

There was less risk aversion in the world marketplace Thursday, partly on news the U.S. and China are set to hold low-level trade talks later this month—the first negotiations in two months. However, the threat of an emerging markets economic and currency crisis is still on the minds of many traders and investors, and this matter will not just disappear. The Turkish lira, which has garnered the most scrutiny in recent weeks, is trading higher versus the U.S. dollar today.

The precious metals markets were hit especially hard Wednesday, on worries about a global economic slowdown that could be caused by a secondary currency crisis. The supposedly safe-haven gold and silver markets have not seen any significant demand surface due to the potential for a currency market contagion. However, if the situation deteriorates further, I do look for gold and silver to catch safe-haven bids.

Technically, gold bears have the solid overall near-term technical advantage amid a price downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,226.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,150.00. First resistance is seen at $1,200.00 and then at Tuesday’s high of $1,205.80. First support is seen at $1,180.00 and then at today’s low of $1,167.10. Wyckoff's Market Rating: 1.0

September silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at $15.00 and then at Tuesday’s high of $15.105. Next support is seen at $14.50 and then at today’s low of $14.315. Wyckoff's Market Rating: 2.0.