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Gold Prices Dip Slightly As U.S. GDP Just Above Forecasts

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(Kitco News) - Gold prices are modestly higher in early U.S. trading Friday but have given up a bit of the moderate gains seen overnight following a U.S. gross domestic product report that was slightly better than expectations. August gold futures were last up $2.70 an ounce at 1,417.40. September Comex silver prices were last up $0.029 at $16.435 an ounce.

The just-released U.S. economic highlight of the week showed the second-quarter gross domestic product—the first estimate--come in at up 2.1%. The GDP growth rate was seen at up 2.0%, year-on-year. That compares to 3.1% GDP growth in the first quarter of this year. Today’s GDP report falls barely into the camp of the U.S. monetary policy hawks, who don’t want to see interest rates lowered. Still, it’s doubtful today’s GDP data will change the minds of Federal Reserve officials who meet next week to discuss monetary policy. The FOMC meets beginning next Tuesday, and is expected on Wednesday to ease monetary policy with an interest rate cut at the conclusion of the meeting.

The U.S. dollar index rallied to a new high for the year following the GDP report, while U.S. Treasury yields rose.

Asian and European stocks mixed to firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session beings.

In other overnight news, an ominous report on very low inflation in the European Union was released Friday, showing the Euro zone inflation will be 1.3% in 2019, 1.4% in 2020 and 1.5% in 2021. That’s according to 52 experts surveyed by the European Central Bank. The ECB wants to see annual inflation of around 2%. The report strongly suggests the ECB will ease its monetary policy soon.

A Commerzbank report today said Chinese demand for gold coming out of Hong Kong is down 83% the past year. Historically Hong Kong has been a major supplier of gold to Chinese consumers. The report mostly blamed the weaker Chinese currency, the yuan, on making gold more expensive to purchase by Chinese consumers.

The other key “outside market” today sees Nymex crude oil prices higher and trading around $56.35 a barrel.    

The only U.S. economic data due for release Friday is the GDP report.

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 $1,425.00 and then at this week’s high of $1,434.10. First support is seen at this week’s low of $1,411.10 and then at $1,410.00. Wyckoff's Market Rating: 7.0

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 this week’s high of $16.685 and then at $16.75. Next support is seen at $16.345 and then at this week’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.