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Gold, Silver Prices Rally, Ignoring Rebounding U.S. Dollar

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(Kitco News) - Gold and silver prices are moderately higher in early U.S. trading Thursday, despite a solid rebound in the U.S. dollar as the U.S. day session gets under way. Gold prices hit a four-week high and silver hit a seven-week high today. Bargain hunting in the cash market and short covering in the futures market are featured in both precious metals. August Comex gold futures were last up $11.60 an ounce at $1,312.90. July Comex silver was last up $0.284 at $17.275 an ounce.

The European Central Bank’s Governing Council Thursday left interest rates unchanged, as expected, but policymakers announced they envision ending the bond-buying program, which is referred to as quantitative easing (QE), at the end of 2018. “The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path,” said a policy statement from the ECB.

The U.S. dollar index reversed course and rallied modestly after the ECB news, after being under good selling pressure overnight. While the ending of QE appears hawkish, currency traders beat the Euro currency down on the wording that the ECB intends to keep interest rates at present levels through at least 2019.

ECB President Mario Draghi’s press conference after the meeting will be closely scrutinized for more clues on the future moves from the central bank. Many think Draghi will sound a more hawkish tone on monetary policy at his press conference.

World stock markets were mostly weaker today. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The U.S. interest rate hike on Wednesday and the ECB ending QE reminds world traders and investors that most of the major central banks of the world are likely to tighten their monetary policies in the coming months, amid rising inflationary pressures. Rising inflation is actually a bullish scenario for raw commodities, including precious metals.

Reports say the Trump administration is set to levy a new batch of tariffs on Chinese imports as soon as Friday. It is expected that China would again retaliate with its own tariffs on U.S. imports. Commodity market prices have been hit by worries of a full-blown trade war between the leading economies of the world. However, this matter is bullish for safe-haven gold and silver markets.

The other key “outside market” today finds Nymex crude oil prices modestly higher and trading just below $67.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export prices, retail sales, and manufacturing and trade inventories.

Live 24 hours gold chart [Kitco Inc.]

Technically, gold bulls have gained the slight near-term technical advantage, and they have momentum late this week. Gold bulls' next upside near-term price breakout objective is to produce a close in August futures above the May high of $1,332.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,286.80. First resistance is seen at $1,320.00 and then at $1,325.00. First support is seen at $1,300.00 and then at the June low of $1,293.10. Wyckoff's Market Rating: 5.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the April high of $17.425 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.75. First resistance is seen at today’s high of $17.305 and then at $17.425. Next support is seen at $17.11 and then at $17.00. Wyckoff's Market Rating: 6.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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