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World Markets Roiled, But Gold Bulls Flex Their Muscles

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(Kitco News) - Gold prices are holding solid gains and are seeing good follow-through strength from Thursday’s advance, on safe-haven demand as the world’s two largest economies see their major trade war escalate. December gold futures were last up $16.30 an ounce at 1,448.60. September Comex silver prices were last down $0.065 at $16.126 an ounce.

The just-released U.S. employment situation report for July showed a rise in the key non-farm payrolls number of 164,000, which is in line with market expectations. In June, non-farm payrolls were up 224,000. Gold prices showed little reaction to the news.

A busy trading week got unexpectedly much busier at midday Thursday when President Trump announced he is going to slap another 10% tariff on Chinese imports into the U.S. The U.S. stock market dropped, U.S. Treasury futures prices soared to new contract highs, the yield on the 10-year U.S. Treasury note dropped to 1.84%, the U.S. dollar dropped, grains and crude oil prices tanked, while the gold market rallied sharply on safe-haven demand.

The escalation of the U.S.-China trade war has other implications, too, including significantly increasing the likelihood the Federal Reserve will again lower interest rates in the coming months. That’s also bullish for the precious metals markets.

The Chinese yuan on Friday dropped to its lowest level against the U.S. dollar since last November. Trump has called out China for devaluing its currency to gain trade advantages.

In other overnight news, the Euro zone producer price index for June came in at down 0.6% from May and up 0.7%, year-on-year.

The key “outside markets” today see Nymex crude oil prices higher and trading just above $55.00 a barrel. The U.S. dollar index is weaker.

Other U.S. economic data due for release Friday includes the international trade report, the ISM New York report on business, manufacturers’ shipments and inventories and the University of Michigan consumer sentiment survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the solid overall near-term technical advantage and gained power late this week. A two-month-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at the July high of $1,467.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at $1,400.00. First resistance is seen at today’s high of $1,461.09 and then at $1,467.00. First support is seen at the overnight low of $1,442.50 and then at $1,437.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the overall near-term technical advantage but have faded late this week and need to step up and show fresh power soon. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the July high of $16.685 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 $16.25 and then at the overnight high of $16.385. Next support is seen at $16.00 and then at this week’s low of $15.935. Wyckoff's Market Rating: 6.5.

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.