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Gold Prices Rally On Specter Of Easy Money From Central Banks

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(Kitco News) - Gold prices are solidly higher in early morning U.S. trading Tuesday, amid growing notions of more accommodative monetary policies from the world’s major central banks. Chart-based buying is also featured in gold as prices are in a near-term uptrend and not far below this year’s highs. August gold futures were last up $11.20 an ounce at $1,354.20. July Comex silver prices were last up $0.121 at $14.95 an ounce.

Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today.

The Federal Open Market Committee (FOMC) meeting begins this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months.

The Bank of Japan also holds its regular monetary policy meeting this week.

European and Asian stock indexes were mostly firmer overnight. The U.S. stock indexes are also pointed toward slightly higher openings when the New York day session begins.

Meantime, the yield on the benchmark German government 10-year bond fell to a record low of -0.299% today. World government bond yields are declining amid very low inflationary pressures in major economies and on slowing world economic growth.

Geopolitics is still near the front burner of the marketplace this week. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation is also inviting some safe-haven buying interest in the gold and silver markets.

The price of Bitcoin has surpassed $9,000 this week and hit a 13-month high. Facebook is launching its own crypto currency, which gives the cryptos more legitimacy.

The key “outside markets” today see Nymex crude oil prices near steady and trading just below $52.00 a barrel. Meantime, the U.S. dollar index is firmer and hit a two-week high in early U.S. trading. 

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and new residential construction.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage. Prices are in a choppy, seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at last week’s high of $1,362.20. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at last week’s low of $1,323.60. First resistance is seen at today’s high of $1,354.70 and then at $1,360.00. First support is seen at $1,350.00 and then at today’s low of $1,342.10. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bears have the overall near-term technical advantage. However, 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 June high of $15.15 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $14.265. First resistance is seen at $15.00 and then at $15.15. Next support is seen at $14.75 and then at last week’s low of $14.625. Wyckoff's Market Rating: 4.0.

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.