Gold, silver prices back off on some normal profit taking in uptrends

(Kitco News) - Gold and silver prices are lower in midday U.S. trading Thursday, on some normal profit taking from the shorter-term futures traders after gold prices scored a nine-year high of $1,829.80 on Wednesday and silver futures hit a 10-month high of $19.445 overnight. Both metals remain strongly bullish from a technical perspective, to suggest more gains coming. August gold futures were last down $16.90 an ounce at $1,803.60. September Comex silver prices were last down $0.206 at $18.96 an ounce.

Today’s U.S. weekly jobless claims report showed just over 1.3 million Americans filed for unemployment insurance in the latest reporting week. That number was a bit less than expected but not a big surprise and markets showed little reaction.

Global stock markets were mixed but mostly up in overnight trading. China’s stock market continues on a roll as its main index, the Shanghai composite, rose for the eighth session in a row and is up 15% since the beginning of July. The U.S. stock indexes are mixed at midday. Trader and investor appetite has pulled back a bit late this week, on notions the U.S. and global economies may be stalling out from their rapid initial recoveries from the Covid-19-induced damage. Several Federal Reserve officials this week issued warnings that U.S. economic growth could be running out of steam amid the resurgence of Covid infections that has caused some states to shut down businesses again.

China’s currency, the yuan, has this week surged to its highest level against the U.S. dollar since March, as China’s economic recovery and growth is apparently outpacing that of the U.S. economy. It’s no secret that the Chinese government wants to unseat the U.S. dollar as the world’s reserve currency.

Said one stock market analyst in a morning email dispatch: “Fundamentals and valuations appear to be of limited influence on investors’ decision making. The fear of missing out, monetary and fiscal policy actions, low yields, lower interest rates for longer, are some of the factors that have led to this structural change in markets. If the Fed can keep zombie companies alive by keeping the lending taps open, why wouldn’t investors profit from these actions? However, the Fed cannot keep running these measures forever, and for many corporates relying on debt to stay afloat, sooner or later they will fail if they can’t return to profitability.”

The U.S. Congressional Budget Office on Wednesday reported the U.S. government spending in June was triple that of the same period last year.

The important outside markets today see Nymex crude oil prices lower and trading around $40.00 a barrel. The U.S. dollar index is higher at midday today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.65% level.

Technically, August gold futures bulls have the strong overall near-term technical advantage, to suggest still more upside in the near term. Prices are in a four-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price objective is to produce a close above technical resistance at $1,850.00. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,754.00. First resistance is seen at today’s high of $1,825.50 and then at this week’s high of $1,829.80. First support is seen at $1,789.00 and then at this week’s low of $1,779.20. Wyckoff's Market Rating: 8.5

September silver futures bulls have the solid overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the 2019 high of $19.54 an ounce. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at today’s high of $19.445 and then at $19.54. Next support is seen at today’s low of $18.83 and then at Wednesday’s low of $18.585. Wyckoff's Market Rating: 8.0.

September N.Y. copper closed up 135 points at 283.75 cents today. Prices closed nearer the session low today and hit a nearly six-month high. The copper bulls have the solid overall near-term technical advantage. Prices are in a 3.5-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 January high of 290.00 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 287.55 cents and then at 290.00 cents. First support is seen at today’s low of 282.35 cents and then at 280.00 cents. Wyckoff's Market Rating: 8.0.