Gold Sees Short-Covering Bounce After Friday’s Shellacking
(Kitco News) - Gold prices are modestly higher in early U.S. trading Monday, on a corrective, short-covering bounce after sharp losses Friday that saw the market hit a six-month low. There is also some risk aversion in the marketplace today that might also be giving gold some mild support. August Comex gold futures were last up $3.70 an ounce at $1,282.20. July Comex silver was last up $0.07 at $16.55 an ounce.
A major bearish weight on the precious metals recently has been the resurgent U.S. dollar index, which hit an 11-month high last Friday.
Much of the raw commodity sector got hit hard last Friday on world trade concerns. Traders are in a risk-averse mood to start the trading week. World trade war worries continue to be on the front burner of the marketplace, as the world’s two largest economies—the U.S. and China—square off. Unfortunately for the gold market bulls, their yellow metal last Friday wanted to act like a raw commodity instead of a safe-haven store of value. Still, the trade tensions worldwide could support the gold market if the situation deteriorates further.
The key “outside markets” today find the U.S. dollar index firmer and not far below last week’s 11-month high. Meantime, Nymex crude oil prices are modestly lower, hit a two-week low overnight and are trading around $64.50 a barrel.
U.S. economic data due for release Monday is light and includes the NAHB housing market index.
Technically, gold bears now have the overall near-term technical advantage and have re-established a price downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close in August futures above solid resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the December low of $1,251.90. First resistance is seen at today’s high of $1,284.90 and then at $1,293.10. First support is seen at last week’s low of $1,277.90 and then at $1,275.00. Wyckoff's Market Rating: 4.0
July silver futures bulls have also lost their overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at $16.75 and then at $16.865. Next support is seen at last week’s low of $16.46 and then at $16.31. Wyckoff's Market Rating: 4.5.