Gold bulls challenge springtime highs, gaining power
(Kitco News) - Gold prices are solidly up and hit a five-week high in midday U.S. trading Tuesday. Bulls are flexing their muscles early this week, amid safe-haven demand that is featured amid a troubling increase in Covid-19 infections around the globe. The technical charts for gold and silver are also fully bullish. August gold futures were last up $15.70 an ounce at $1,782.20. July Comex silver prices were last up $0.128 at $18.03 an ounce.
It could also be that the precious metals market bulls are sensing that down the road, all the recent easy money printed by the major central banks will indeed come home to roost--in the form of problematic price inflation, deflated currencies and possibly “stagflation,” which is a combination of price inflation and anemic economic growth.
Global stock markets were mostly up Tuesday. U.S. stock markets are higher at midday. Equities markets were lifted in part overnight following a tweet from President Trump that said the U.S.-China Phase 1 trade deal is still very much in place. This comes following and after-hours sell off after one of Trump’s top economic advisors, China-hawk Peter Navarro, on Monday evening suggested in a TV interview that the trade deal was off. Trump’s tweet a bit later prompted the rebound.
Trader and investor sentiment is also mostly upbeat amid recent data from major world economies that shows they are rebounding from the Covid-19 pandemic shutdowns much more rapidly than most expected. Overnight the Euro zone June flash composite purchasing managers index (PMI) was reported at 46.9 versus expectations for a reading of 40.0 and compares to May’s 31.9. A reading below 50.0 suggests contraction. The U.S. flash services PMI for June came in at 46.7 and the manufacturing flash PMI was 49.6. Those numbers were closer to expectations but still not bad readings at all and well better than last month’s numbers.
However, a disturbing rise in Covid infections in some parts of the world, including some U.S. states, is being watched very closely by the marketplace and could soon dent risk appetite. If the rates of infections continue to increase, the debate will intensify regarding shutting businesses back down. Such would deal a catastrophic blow to the now-recovering economies and would likely send stock markets careening lower. The gold market is presently getting a safe-haven bid on these notions.
The important outside markets today see Nymex crude oil prices higher and trading around $41.00 a barrel. The U.S. dollar index is lower at midday today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.72% level.
Technically, August gold futures prices were nearer the session high near midday and poised to close at a 7.5-year high close. The bulls have the solid overall near-term technical advantage and have momentum to push to a new for-the-move high soon. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,789.00. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,750.00. First resistance is seen at $1,789.00 and then at $1,800.00. First support is seen at today’s low of $1,758.30 and then at this week’s low of $1,753.50. Wyckoff's Market Rating: 8.5
July silver futures were nearer the session high at midday. The silver bulls have the solid overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the April high of $19.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at this week’s high of $18.19 and then at $18.405. Next support is seen at today’s low of $17.73 and then at $17.50. Wyckoff's Market Rating: 7.0.
July N.Y. copper closed steady at 265.25 cents today. Prices closed nearer the session high today. The copper bulls 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 250.00 cents. First resistance is seen at today’s high of 267.45 cents and then at 270.00 cents. First support is seen at today’s low of 261.95 cents and then at this week’s low of 259.50 cents. Wyckoff's Market Rating: 6.5.