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Gold Prices Pull Back On Strong U.S. Retail Sales

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(Kitco News) - Gold and silver prices are weaker in early U.S. trading Thursday. Some upbeat U.S. economic data has put some added downside pressure on the metals. The markets are also pausing to see how early trading unfolds in the U.S. stock market, following overnight developments on the U.S.-China trade war front. There is a big batch of U.S. economic data to be released today. December gold futures were last down $3.20 an ounce at 1,524.60. September Comex silver prices were last down $0.11 at $17.17 an ounce.

The just-released U.S. retail sales report for July showed gained 0.7%, which was more than double trade expectations. That news put more downside price pressure on the safe-haven metals and falls into the camp of U.S. monetary policy hawks.

Asian and European stock markets were mixed overnight and trying to stabilize from recent selling pressure. U.S. stock indexes are pointed toward higher openings when the New York day session begins.

Global stock markets shuddered when news hit the wires about two hours ago that China plans to retaliate against the U.S. for the new U.S. trade tariffs, some of which go into effect on September 1. China is demanding the U.S. lift all of its trade tariffs on Chinese products. President Trump tweeted Wednesday evening that China’s “humane” response to the Hong Kong protesters is tied to a trade deal being reached with the U.S. These developments appear to have the U.S.-China trade war taking another step back, regarding an agreement being reached anytime soon. However, some news headlines that have just come out of China publications are now saying China may want to meet the U.S. half-way on the trade talks. All of the above are making for jittery world stock markets. Earlier this week the U.S. pushed back the timeline on some new tariffs being imposed on China, which briefly buoyed world stock markets.

U.S. Treasury and world government bond yields continue to fall, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%.

News reports said China last year curtailed its gold imports by 300 to 500 metric tons, in order to prevent capital from leaving the country in the form of gold purchases amid the weakening Chinese currency, the yuan.

The key “outside markets” today see Nymex crude oil prices lower and the U.S. dollar index modestly down, too.

It’s a very busy day for U.S. economic data Thursday, including the weekly jobless claims report, the Empire State manufacturing survey, the Philadelphia Fed business outlook survey, retail sales, preliminary productivity and costs, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, and Treasury international capital data.

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 $1,600.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at $1,500.00. First resistance is seen at the overnight high of $1,534.90 and then at this week’s high of $1,546.10. First support is seen at the overnight low of $1,518.30 and then at $1,510.00. Wyckoff's Market Rating: 8.0

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the solid overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.685. First resistance is seen at the overnight high of $17.37 and then at this week’s high of $17.49. Next support is seen at $17.00 and then at Wednesday’s low of $16.855. Wyckoff's Market Rating: 8.0.

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.