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Gold Prices Power Above $1,500; Marketplace Suddenly Spooked

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(Kitco News) - Gold prices are sharply higher and hit another six-year high above the key $1,500.00 level in early U.S. trading Wednesday. Silver prices are also solidly higher and have hit a 13-month high of $17.01, basis December Comex futures. At the beginning of U.S. dealings, traders and investors are really on edge as U.S. Treasury yields took a dramatic dive the past 90 minutes. Safe-haven demand continues to be featured in the two precious metals. December gold futures were last up $23.50 an ounce at 1,507.70. September Comex silver prices were last up $0.52 at $16.965 an ounce.

The yield on the benchmark U.S. Treasury note dropped to 1.628% this morning, with government bonds in Europe also seeing their yields slide, especially the safe-haven German bond (bund). Television business channel commentators are saying this morning’s big down-moves in bond yields are similar to the bond price action seen during the 2008 financial crisis.

Asian stock markets were down overnight and European stock indexes were firmer up until the U.S. opening of markets. U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. Serious near-term technical damage has been inflicted on the U.S. stock indexes recently, to suggest they have put in at least near-term tops.

The U.S.-China trade war continues to be on the front burner of the marketplace. China’s central bank on Wednesday set its currency, the yuan, exchange rate with the U.S. dollar at 6.9996. That’s the lowest fixing set by the central bank in 11 years, but still just below the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored by the world marketplace, as China is already being accused of using its currency as a trade weapon. The U.S. designated China as a currency manipulator earlier this week.

In other overnight news, New Zealand’s central bank cut its interest rate more than expected Wednesday, by 0.5%. This sparked a sell off in the Australian dollar.

The key “outside markets” today see Nymex crude oil prices lower and trading around $52.70 a barrel. The U.S. dollar index is trading slightly lower in early U.S. trading.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, consumer credit and the weekly DOE liquid energy stocks report.

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 $1,550.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at $1,467.00. First resistance is seen at $1,515.00 and then at $1,525.00. First support is seen at $1,500.00 and then at $1,490.00. Wyckoff's Market Rating: 9.0

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 $17.50 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 $17.15 and then at $17.25. Next support is seen at $16.75 and then at $16.50. Wyckoff's Market Rating: 8.5.

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