Gold hits 7.5-year high, backs off on normal profit taking
(Kitco News) - Gold prices are moderately lower in midday U.S. trading Wednesday after pushing to a 7.5-year high of $1,796.10 overnight, basis August futures, before backing off. Safe-haven demand has been featured in the yellow metal this week amid a troubling rise in Covid-19 infections around the globe. Importantly, the technical charts for gold and silver are still fully bullish (especially in gold), suggesting more upside price potential for both metals in the near term. August gold futures were last down $7.70 an ounce at $1,774.30. July Comex silver prices were last down $0.413 at $17.65 an ounce.
A solid drop in the U.S. stock market today appeared to be negative for the precious metals markets, driving them down from overnight highs. European stock markets were also down in overnight trading, while Asian bourses were mixed. Trader and investor risk appetite is waning at mid-week. There is intensified debate on whether the rise in Covid infections will result in a renewed lockdown of businesses that would mean further damage to recovering economies. There is also growing talk in the marketplace that U.S. President Trump stands a good chance of losing his seat this fall. Such would be construed as bearish for U.S. equities due to ideas of higher taxes on businesses.
In other news Tuesday, Germany’s closely watched Ifo business sentiment index rose by a record amount in June, coming in at 86.2 from 79.7 in May. “German business sees light at the end of the tunnel,” said the Ifo report. This is just the latest piece of data suggesting major global economies are healing much faster than most economists had expected.
The important outside markets today see Nymex crude oil prices sharply lower and trading around $38.00 a barrel. The U.S. dollar index is up solidly today. These two markets were in a bearish daily posture for the precious metals markets today.
The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.69% level. For perspective, the 10-year German government bond (the bund) is presently yielding -0.44%.
Technically, August gold futures bulls still have the solid overall near-term technical advantage. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at $1,800.00. Bears' next near-term downside price objective is pushing prices below solid technical support at this week’s low of $1,753.50. First resistance is seen at $1,789.00 and then at today’s high of $1,796.10. First support is seen at today’s low of $1,770.60 and then at Tuesday’s low of $1,758.30. Wyckoff's Market Rating: 8.0
July silver futures prices were nearer the session low at midday and scored a bearish “outside day” down today. The silver bulls still have the firm 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 $18.00 and then at today’s high of $18.255. Next support is seen at today’s low of $17.425 and then at $17.25. Wyckoff's Market Rating: 7.0.
July N.Y. copper closed down 165 points at 264.25 cents today. Prices closed nearer the session low today. The copper bulls have firm 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 268.45 cents and then at 270.00 cents. First support is seen at Tuesday’s low of 261.95 cents and then at this week’s low of 259.50 cents. Wyckoff's Market Rating: 6.5.