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Gold Prices See Normal Pause This Week

Kitco News

(Kitco News) - Gold prices are modestly down in early U.S. trading Monday, on some profit taking from the shorter-term futures traders and a normal pause and consolidation after prices last week hit a six-year high. A stronger greenback today is also a negative for the metals markets. Silver prices are higher and not far below the 13-month high scored last week. August gold futures were last down $2.30 an ounce at 1,424.60. September Comex silver prices were last up $0.074 at $16.48 an ounce.

Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings. This is a big week for U.S. corporate earnings reports.

Traders and investors are in upbeat moods on Tuesday. Reports say President Trump met with U.S. technology companies Monday at the White House, regarding easing U.S. sanctions on China’s big communications firm, Huawei. This is being deemed a big positive on the U.S.-China trade front, suggesting the U.S. wants to move the negotiations forward. The news is a mixed bag for the safe-haven metals, as the rally in competing asset class equities is bearish, but the specter of better demand for gold and silver coming from a healthier Chinese economy on a trade deal would be bullish for the metals.

Also slightly boosting world stock markets is news the U.S. Congress and the Trump administration have agreed on a government spending deal, to avoid a government shutdown anytime soon.

The marketplace so far this week is not seeing much lingering reaction to the weekend news Iran’s military seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Still, Iran’s confrontation with the U.S. and the U.K. sees a high probability of escalating in the coming weeks.

Just over the horizon: the European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $56.00 a barrel. Meantime, the U.S. dollar index is solidly higher and hit a five-week high today.   

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the Richmond Fed business survey, and existing home sales.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls still have the solid overall near-term technical advantage. A two-month-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 $1,500.00. 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 Monday’s high of $1,430.80 and then at $1,442.00. First support is seen at the overnight low of $1,414.60 and then at $1,410.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the solid 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 $15.625. First resistance is seen at $16.50 and then at $16.75. Next support is seen at $16.25 and then at Monday’s low of $16.195. Wyckoff's Market Rating: 7.5.

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.