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Gold Prices Pause; Bulls Remain Strong

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(Kitco News) - Gold prices near steady and pausing in early U.S. trading Tuesday, after scoring another six-year high in overnight dealings. Safe-haven demand has been featured the past few sessions amid an escalating U.S.-China trade war. December gold futures were last up $0.10 an ounce at 1,476.60. September Comex silver prices were last up $0.037 at $16.43 an ounce.

Asian and European stock markets were mixed overnight. Asian stock markets were down and European stock indexes were higher. U.S. stock indexes recovered from follow-through early overnight losses and are set to open higher when the New York day session begins. Serious near-term technical damage has been inflicted on the U.S. stock indexes, to suggest they have put in at least near-term tops. Remember that the historically turbulent stock market months of September and October are right around the corner.

News late Monday that the U.S. labeled China a currency maninpulator initially pushed world stock markets still lower, following Monday’s steep losses. However, China’s central bank then set its currency, the yuan, exchange rate with the U.S. dollar at 6.9683, which was 0.7% down from Monday’s fixing. The yuan depreciated to an 11-year low against the U.S. dollar Monday, at 7.1087 to the dollar. The move on Monday led to ideas China has thrown in the towel on any trade agreement with the U.S. coming anytime soon. However, Tuesday’s yuan fixing below 7 gave pause to those thinking the Chinese government will let the yuan continue to depreciate against the U.S. dollar. Also, China’s central bank knows the downside of letting the yuan fall in value--one being flight of capital out of China, which has very likely already been occurring.

President Trump announced last week that on September 1 the U.S. will impose another 10% tariff on Chinese imports into the U.S. China, in turn, announced it will suspend its purchases of U.S. agricultural products.

Many market watchers now reckon the U.S.-China trade war being ratcheted up another notch will prompt the Federal Reserve to again lower U.S. interest rates soon. Speeches by Federal Reserve officials in the coming days will garner extra scrutiny from the marketplace. St. Louis Fed President James Bullard speaks to the National Economics Club later today.

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

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IBD/TIPP economic optimism index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the strong overall near-term technical advantage. A 10-week-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 $1,500.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at $1,425.00. First resistance is seen at today’s high of $1,486.80 and then at $1,500.00. First support is seen at the overnight low of $1,468.20 and then at $1,454.00. Wyckoff's Market Rating: 8.5

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 the July high of $16.685 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $15.935. First resistance is seen at Monday’s high of $16.59 and then at $16.685. Next support is seen at $16.25 and then at Monday’s low of $16.135. 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.