Gold Firmer Amid Still-Wobbly World Stock Markets

(Kitco News) - Gold prices are modestly higher in midday U.S. trading Thursday, as global stock and financial markets are still on edge as the world’s two largest economies go head-to-head in a major trade war. Civil unrest in Hong Kong is adding to marketplace anxiety. December gold futures were last up $2.50 an ounce at 1,530.10. September Comex silver prices were last down $0.06 at $17.22 an ounce.

Gains in the gold market were limited today by a very upbeat U.S. retail sales report for July, which showed a gain of 0.7%, which was more than double trade expectations. That news fell into the camp of U.S. monetary policy hawks, who do not want to see the Federal Reserve raise interest rates.

Global stock markets shuddered overnight when news hit the wires that China plans to retaliate against the U.S. for the new U.S. trade tariffs, some of which go into effect on September 1. China is demanding the U.S. lift all of its trade tariffs on Chinese products. President Trump tweeted Wednesday evening that China’s “humane” response to the Hong Kong protesters is tied to a trade deal being reached with the U.S. These developments appear to have the U.S.-China trade war taking another step back, regarding an agreement being reached anytime soon. However, some news headlines that came out of China publications are saying China may want to meet the U.S. half-way on the trade talks. All of the above are making for jittery world stock markets. Earlier this week the U.S. pushed back the timeline on some new tariffs being imposed on China, which briefly buoyed world stock markets.

U.S. Treasury and world government bond yields continued to fall Thursday, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%.

The key “outside markets” today see Nymex crude oil prices lower and the U.S. dollar index higher.

Technically, December gold futures prices closed nearer the session high. The bulls have the strong overall near-term technical advantage. A 10-week-old uptrend is in place on the daily bar chart. There are still no significant, early chart clues to suggest a market top is close at hand. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,550.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at this week’s low of $1,488.90. First resistance is seen at this week’s high of $1,546.10 and then at $1,550.00. First support is seen at $1,525.00 and then at today’s low of $1,518.30. Wyckoff's Market Rating: 8.5

September silver futures prices closed nearer the session high today. The silver bulls have the solid overall near-term technical advantage. An 11-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $16.51. First resistance is seen at this week’s high of $17.49 and then at $17.75. Next support is seen at $17.00 and then at $16.685. Wyckoff's Market Rating: 8.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com