Gold Soars On Safe-Haven Demand; More Upside Likely
(Kitco News) - Gold prices are sharply up and have hit a six-year high in early-afternoon U.S. trading Monday. Strong safe-haven demand is featured to start the trading week, amid an escalating U.S.-China trade war and civil unrest in Hong Kong. December gold futures were last up $19.60 an ounce at 1,477.00. September Comex silver prices were last up $0.11 at $16.38 an ounce.
World stock markets tumbled Monday amid heightened worries about an escalating trade war between the world’s two largest economies—the U.S. and China. U.S. stocks are sharply lower and near daily lows at midday.
The Chinese currency, the yuan, depreciated to a near record low against the U.S. dollar Monday, at 7.1087 to the dollar. This is leading to ideas China has thrown in the towel on any trade agreement with the U.S. coming anytime soon. China’s central bank appeared to condone the decline in its currency, saying the yuan’s fall is the result of U.S. protectionism and that the yuan remains stable. In the past, China’s central bank had stepped in to boost the yuan when it reached 7 to the dollar.
President Trump announced late last week that on September 1 he will slap another 10% tariff on Chinese imports into the U.S. Trump on Monday morning tweeted that China is manipulating its currency and that the U.S. Federal Reserve had better take note of it.
While world stock markets have sold off, U.S. Treasury futures prices have hit new contract highs, with the yield on the 10-year U.S. Treasury note falling well below 2.00%. The U.S. dollar has dropped sharply and crude oil prices have also fallen.
The escalation of the U.S.-China trade war has other implications, too, including significantly increasing the likelihood the Federal Reserve will again lower U.S. interest rates yet this year.
Major protesting in the streets of Hong Kong and fears about a “hard” U.K. Brexit also have the world marketplace uneasy.
The key “outside markets” today see Nymex crude oil prices weaker and trading just above $55.00 a barrel. The U.S. dollar index is solidly lower.
Technically, December gold futures prices closed nearer the session high today. The bulls have the strong overall near-term technical advantage and gained more power today. Bulls have restarted a nine-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,412.10. First resistance is seen at today’s high of $1,481.80 and then at $1,490.00. First support is seen at $1,467.00 and then at $1,454.00. Wyckoff's Market Rating: 8.5
September silver prices closed near mid-range today. The silver bulls have the solid overall near-term technical advantage. A 10-week-old uptrend is in place on the daily bar chart. 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 today’s high of $16.59 and then at $16.685. Next support is seen at today’s low of $16.135 and then at $16.00. Wyckoff's Market Rating: 7.5.
September N.Y. copper closed down 265 points at 254.50 cents today. Prices closed nearer the session low and hit a 2.5-year low today. The copper bears have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 268.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at today’s high of 257.80 cents and then at 260.00 cents. First support is seen at today’s low of 253.15 cents and then at 252.00 cents. Wyckoff's Market Rating: 1.0.