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Gold Prices Power To 6-Yr High, But Due For Correction

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(Kitco News) - Gold prices are posting more good gains in early U.S. trading Tuesday, and hit another six-year high of $1,442.90 in August futures. A bullish cocktail of safe-haven demand, a slumping U.S. dollar index, easy central bank monetary policies and bullish technicals are driving the yellow metal north. However, the recent strong gains have now put gold into a short-term overbought condition, technically, which means the market is due for a normal and healthy downside correction very soon. August gold futures were last up $11.00 an ounce at 1,429.10. July Comex silver prices were last down $0.007 at $15.37 an ounce.

Asian and European stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. Many markets are in a pause mode, awaiting fresh news on the geopolitical front.

The U.S.-Iran tensions in the Persian Gulf region continue to simmer near the front burner. President Trump said Monday there will be major new sanctions put in Iran and called the country the world’s number-one sponsor of terrorism. Traders and investors are wondering how Iran will respond, and if Iran is itching for a military confrontation with the U.S. Trump appears unwilling to start a fight, but he also will not likely stand by idly while being provoked. This situation is likely to linger for quite a while and will likely get worse before it gets better.

Meantime, U.S. President Trump and Chinese President Xi are scheduled to meet in Japan at the G20 meetings late this week—possibly after all the markets are closed on Friday-- and discuss their ongoing trade war. The outcome of that meeting is uncertain and could have huge implications for many markets, especially if an agreement is reached to end the trade war. Many reckon a final deal will not be announced this week, but instead the two countries will likely say they’ve made some progress and will keep talking.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $57.50 a barrel. Meantime, the U.S. dollar index is slightly up on a corrective bounce after hitting a three-month low overnight. 

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly house price index, the S&P/CoreLogic house price index, the Richmond Fed business survey, the consumer confidence index and new residential sales. Several Federal Reserve Board officials are also scheduled to speak today.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the strong overall near-term technical advantage. Prices are in an accelerating four-week-old uptrend on the daily bar chart. However, the market is now short-term overbought and due for a normal and healthy downside correction very soon. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,450.00. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,400.00. First resistance is seen at today’s high of $1,442.90 and then at $1,450.00. First support is seen at today’s low of $1,421.40 and then at $1,415.00. Wyckoff's Market Rating: 9.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the overall near-term technical advantage. 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 $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.625. First resistance is seen at last week’s high of $15.555 and then at $15.73. Next support is seen at $15.25 and then at $15.00. Wyckoff's Market Rating: 6.0.

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