Gold, Silver Bulls Bask On Easy Money

(Kitco News) - Gold and silver prices are strongly higher in early-afternoon U.S. trading Thursday. Gold has powered to a five-year high, while silver prices hit an 11-week high today. Major central banks that are leaning easy on their monetary policies are boosting the metals and the raw commodity sector, in general. Gold is also seeing increased safe-haven buying interest as tensions in the Persian Gulf are on the rise. August gold futures were last up $43.20 an ounce at 1,392.00. July Comex silver prices were last up $0.502 at $15.46 an ounce.

Traders and investors are still digesting Wednesday’s conclusion of the Federal Open Market Committee (FOMC) meeting that saw no change in U.S. interest rates, but the Fed did lean significantly more dovish. The FOMC statement said the committee would lower interest rates in the coming months if U.S. economic growth begins to slow down. The FOMC expects the U.S. economic expansion to continue but “uncertainties about this outlook have increased,” the statement said. About half of the FOMC members now expect the Fed to make at least one interest rate reduction this year. The FOMC statement also eliminated the word “patient” from its monetary policy stance.

Markets are continuing to react to the dovish Fed meeting and also to European Central Bank President Mario Draghi’s easy stance on monetary policy in comments he made earlier this week. The U.S. dollar index has sold off, the Euro currency has rallied, crude oil prices have surged and U.S. stock indexes have pushed higher and are at or within easy striking distance of their record highs. European and Asian stock indexes were also mostly higher Thursday.

Gold is also seeing safe-haven demand today on reports Iran’s military shot down a U.S. military drone in Iranian territory. Also, a missile struck a Saudi Arabian water plant, and Iran is being blamed. The U.S.-Iran stare-down just got ratcheted up another notch. President Trump said Iran “made a bad mistake” and Trump is now likely closer than ever to unleashing some degree of a military operation against Iran. It’s a good bet this situation will get worse before it gets better.

The key “outside markets” today see Nymex crude oil prices solidly higher and trading just below $57.00 a barrel. Meantime, the U.S. dollar index is lower on good follow-through selling from solid losses posted Wednesday afternoon in the wake of the dovish FOMC statement. 

Technically, August gold futures prices closed near the daily high today. The bulls have the solid overall near-term technical advantage and gained more power today. Prices are in an accelerating 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 $1,400.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of $1,361.30. First resistance is seen at today’s high of $1,397.70 and then at $1,400.00. First support is seen at $1,380.00 and then at $1,375.00. Wyckoff's Market Rating: 8.5

July silver futures prices closed near the session high and hit an 11-month high today. The silver bulls have gained the overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the March high of $15.73 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.75. First resistance is seen at today’s high of $15.485 and then at $15.73. Next support is seen at $15.25 and then at $15.15. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed up 315 points at 271.25 cents today. Prices closed near mid-range and hit a four-week high today. The copper bears still have the overall near-term technical advantage. However, a seven-week-old downtrend on the daily bar chart has been negated to suggest a market bottom is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 285.00 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 273.75 cents and then at 275.00 cents. First support is seen at Wednesday’s low of 267.35 cents and then at Tuesday’s low of 264.35 cents. Wyckoff's Market Rating: 3.5.