Gold Bulls Bask In Easy-Fed Limelight
(Kitco News) - Gold prices are higher again in early U.S. trading Thursday. Federal Reserve Chairman Jerome Powell on Wednesday tipped his hand on an increasingly dovish U.S. monetary policy. That’s bullish for raw commodities, including the precious metals. There is also some fresh safe-haven demand for gold late this week. August gold futures were last up $9.80 an ounce at 1,422.30. September Comex silver prices were last up $0.069 at $15.295 an ounce.
The marketplace on Thursday is still digesting Powell’s comments from Wednesday. In is his speech to House lawmakers he said since the June FOMC meeting uncertainties, including world trade tensions, global growth and very low inflation, continue to cloud the outlook for the U.S. economy and these matters are not improving. He said the U.S. economic outlook is solid, but the prospects for other major world economies are worrisome. The marketplace read his remarks as fully dovish on U.S. monetary policy, which in turn strongly suggests the Fed will cut U.S. interest rates as soon as this month. That’s a bullish scenario for U.S. Treasuries, the U.S. stock market, and commodities markets, including the precious metals. However, it was a bearish development for the U.S. dollar on the foreign exchange market. Powell speaks to a U.S. Senate panel today.
Gold prices are also seeing safe-haven demand Thursday. Reports said a British warship had to step in and rescue a U.K. oil tanker that was being harassed by several Iranian vessels in the Strait of Hormuz.
In overnight news, the Bank of England said the risk of a “no deal” on Brexit has hurt the U.K. economy.
The key “outside markets” today see Nymex crude oil prices higher and trading just below $61.00 a barrel. The U.S. dollar index is lower early today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the monthly USDA supply and demand report, real earnings, the consumer price index, the monthly Treasury budget statement, and the monthly chain store sales index. Several Federal Reserve officials are also scheduled to make speeches today.
Technically, the gold bulls have the firm overall near-term technical advantage. A six-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the June high of $1,442.90. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at the July low of $1,384.70. First resistance is seen at today’s high of $1,429.40 and then at $1,435.00. First support is seen at $1,410.00 and then at $1,400.00. Wyckoff's Market Rating: 7.5
September silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.625 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.70. First resistance is seen at $15.51 and then at $15.625. Next support is seen at Wednesday’s low of $15.07 and then at $15.00. Wyckoff's Market Rating: 5.5.