Gold Rallies Despite Negative Outside Elements

(Kitco News) - Gold prices are moderately higher but down from session highs in midday U.S. trading Tuesday. Still, the yellow metal is poised to close at a four-month-high close today. Prices were supported from growing notions of more accommodative monetary policies from the world’s major central banks. Chart-based buying was also featured in gold as prices are in a near-term uptrend and not far below this year’s highs. Gains were pared on the day, however, by a stronger U.S. dollar index and a big rally in the U.S. stock market. August gold futures were last up $7.60 an ounce at $1,350.50. July Comex silver prices were last up $0.171 at $15.00 an ounce.

Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today.

The Federal Open Market Committee (FOMC) meeting began this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. Many believe the ECB Draghi’s dovish comments today give the FOMC more leeway to lower rates.

The Bank of Japan also holds its regular monetary policy meeting this week.

European and Asian stock indexes were mostly firmer overnight. The U.S. stock indexes are rallying solidly due in part to a tweet from President Trump saying he and Chinese President Xi had a good telephone conversation and will meet at the G-20 conference in Japan late next week.

Meantime, the yield on the benchmark German government 10-year bond fell to a record low of -0.299% today. World government bond yields are declining amid very low inflationary pressures in major economies and on slowing world economic growth.

Geopolitics is still near the front burner of the marketplace this week. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation is also inviting some safe-haven buying interest in the gold and silver markets.

The key “outside markets” today see Nymex crude oil prices solidly higher and trading just below $54.00 a barrel. Meantime, the U.S. dollar index is firmer and hit a two-week high today. 

Technically, August gold futures prices closed near mid-range. The bulls have the solid overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the June high of $1,362.20. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,323.60. First resistance is seen at today’s high of $1,358.50 and then at $1,362.20. First support is seen at today’s low of $1,342.10 and then at this week’s low of $1,336.60. Wyckoff's Market Rating: 7.5

July silver futures prices closed nearer the session high today. The silver bears still have the overall near-term technical advantage. However, bulls are working on a fledgling price uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.15 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $14.265. First resistance is seen at today’s high of $15.08 and then at $15.15. Next support is seen at this week’s low of $14.755 and then at last week’s low of $14.625. Wyckoff's Market Rating: 4.0.

July N.Y. copper closed up 545 points at 270.10 cents today. Prices closed nearer the session high today and hit a three-week high on more short covering. The copper bears still have the overall near-term technical advantage. However, a seven-week-old downtrend on the daily bar chart was negated today. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 280.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the June low of 259.95 cents. First resistance is seen at today’s high of 271.25 cents and then at 273.00 cents. First support is seen at 267.50 cents and then at today’s low of 264.35 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff