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Gold Prices Gain As Risk Aversion Returns

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(Kitco News) - Gold prices are higher in early U.S. trading Friday, as traders and investors are uneasy again, and looking to the safe-haven metals for cover. December gold futures were last up $3.70 an ounce at 1,513.30. September Comex silver prices were last up $0.059 at $16.995 an ounce.

Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. After a couple days of respite, trader and investor anxiety has returned to the global marketplace, heading into the weekend.

There is once again protesting in Hong Kong, this time at its main airport. Market watchers wonder how long mainland China will allow the civil unrest.

Slowing world economic growth prospects are in greater focus today after the U.K. economy contracted in the second quarter by 0.2% from the first quarter and was down 0.8%, year-on-year. Worries about the U.K. Brexit are hurting consumer confidence in the country.

The International Energy Agency on Friday lowered world crude oil demand growth by 100,000 barrels per day, citing concerns about world economic growth, including world trade relations.

Meantime, China reported its July producer price index down 0.3%, year-on-year, but consumer prices rose 2.8% in the same period. That’s a negative signal for China’s consumers and producers.

Japan did get some good economic news Friday, as its GDP was reported up 0.4% in the second quarter from the first quarter, and up 1.7%, year-on-year.

The yield on the benchmark U.S. Treasury note fell overnight to around 1.6%, on safe-haven demand. Gold prices are also higher.

China’s central bank on Friday again set its currency, the yuan, exchange rate with the U.S. dollar at just above the 7 level, which is the level at which the U.S. has deemed problematic. This exchange rate will continue to be closely monitored.

The key “outside markets” today see Nymex crude oil prices modestly higher and trading around $52.75 a barrel. The U.S. dollar index is trading slightly lower in early U.S. action.

U.S. economic data due for release Friday includes the producer price 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 this week’s high of $1,522.70 and then at $1,525.00. 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 the overnight high of $17.14 and then at this week’s high of $17.26. Next support is seen at Thursday’s low of $16.81 and then at $16.685. Wyckoff's Market Rating: 8.0.

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