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Gold Prices See Normal Corrective Pullback

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(Kitco News) - Gold prices are lower in early U.S. trading Thursday, on some profit taking from the shorter-term futures traders and on a normal corrective pullback and consolidation after prices hit a six-year high Wednesday. The global marketplace is calmer Thursday, following the keener anxiety seen among traders and investors on Wednesday. Silver prices are also lower after hitting a 13-month high Wednesday. December gold futures were last down $10.40 an ounce at 1,509.20. September Comex silver prices were last down $0.161 at $17.03 an ounce.

Asian and European stock markets were mostly up overnight, on some upbeat economic data coming out of China. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Price action the past two days hints the U.S. stock index bears may now be exhausted, which begins to suggest near-term market bottoms are in place. Still, price action today and Friday will be extra important.

China’s exports rebounded in July, rising 3.3%, year-on-year, and compares to a 1.3% decline reported for June. China’s exports in July were expected down 2.0%. Meantime, China’s July imports were down 5.6%, year-on-year.

The yield on the benchmark U.S. Treasury note rose to 1.729% this morning, after dropping to around 1.61% earlier this week.

China’s central bank on Thursday set its currency, the yuan, exchange rate with the U.S. dollar at 7.0039. That’s the weakest yuan fixing set by the central bank in 11 years, and is above the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored. The U.S. designated China as a currency manipulator earlier this week.

The key “outside markets” today see Nymex crude oil prices higher and trading around $52.25 a barrel. The U.S. dollar index is trading slightly higher in early U.S. action.

U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade and the monthly retail chain stores sales index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the solid 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 the overnight high of $1,518.60 and then at this week’s high of $1,522.70. First support is seen at $1,500.00 and then at $1,490.00. 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 $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 this week’s high of $17.26 and then at $17.50. Next support is seen at $17.00 and then at $16.685. Wyckoff's Market Rating: 8.0.

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