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Gold, silver gain as central banks show more firepower

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(Kitco News) - Gold and silver prices are trading with decent gains in midday U.S. trading Tuesday. The gains for the safe-haven metals come despite a rally in the U.S. stock market due in part to the U.S. Federal Reserve providing more monetary stimulus and on reports that a drug has been realized that can cut death risks of patients on ventilators by one-third. August gold futures were last up $9.50 an ounce at $1,736.60. July Comex silver prices were last up $0.236 at $17.64 an ounce.

Global stock markets were also mostly up in overnight trading. The U.S. stock indexes on Monday made a strong recovery from sharp early-day losses and extended that rally today as the Federal Reserve announced Monday that it has started buying corporate bonds, in an extension of an existing program that had only purchased corporate bond exchange traded funds. The Bank of Japan this week announced a similar plan. Reports also said the Trump administration is planning to spend $1 trillion on U.S. infrastructure improvements.

There is growing agreement the Federal Reserve and other central banks will continue to deploy more firepower to support their economies. This will come as their governments’ debt obligations continue to bulge—likely creating a serious problem down the road.

Tuesday’s U.S. retail sales report for May showed a rise of 17.7% versus expectations for a rise of 7.7%. This is yet another U.S. data point that shows a surprising rebound in the U.S. economy from the Covid-19-inducted damage of the past three months. Gold lost overnight gains on this news, but recouped them as the session progressed.

The U.S. economic highlight of the week is Fed Chairman Jerome Powell’s two days of congressional testimony that began on Tuesday. Powell made no comments to surprise the marketplace, generally saying the U.S. economy won’t fully recover until the pandemic is under firm control.

In other news, North Korea is ramping up its bellicose activities, as it blew up a meeting facility with South Korea that was just inside the North Korean border. Many look for North Korea to become more provocative with the U.S. as the U.S. presidential election approaches in November.

The important outside markets early today see the U.S. dollar index higher. Meantime, Nymex crude oil prices are higher and trading around $38.00 a barrel. The International Energy Agency said Tuesday global oil demand in 2020 will decline by 8.1 million barrels per day. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.78% level.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls still have the firm overall near-term technical advantage but trading has returned to a choppy and sideways pattern at higher levels. Longer term, such action could be storing energy for another leg up in prices in the coming weeks or months. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at $1,761.00. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,700.00. First resistance is seen at this week’s high of $1,743.80 and then at $1,750.00. First support is seen at today’s low of $1,721.80 and then at this week’s low of $1,706.20. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures silver bulls have the overall near-term technical advantage as trading turns choppy. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $19.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at today’s high of $17.79 and then at $18.00. Next support is seen at today’s low of $17.465 and then at $17.25. Wyckoff's Market Rating: 6.5.

July N.Y. copper closed down 45 points at 256.25 cents today. Prices closed near mid-range today. The copper bulls still have the overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 270.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 240.00 cents. First resistance is seen at today’s high of 261.50 cents and then at 263.00 cents. First support is seen at today’s low of 253.10 cents and then at 250.00 cents. Wyckoff's Market Rating: 6.5.

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.