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Gold prices back off 9-yr. highs, bulls still strong

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(Kitco News) - Gold prices are modestly down in early U.S. trading Thursday, on some mild profit taking after prices scored a nine-year high of $1,829.80 on Wednesday. Meantime, silver prices notched another 10-month high overnight as that market closes in on $20.00. Both metals remain strongly bullish from a technical perspective. August gold futures were last down $3.90 an ounce at $1,816.70. September Comex silver prices were last up $0.124 at $19.29 an ounce.

The just-released U.S. weekly jobless claims report showed just over 1.3 million Americans filed for unemployment insurance in the latest reporting week. That number was not a surprise and markets showed little reaction.

Global stock markets were mixed but mostly up in overnight trading. China’s stock market continues on a roll as its main index, the Shanghai composite, rose for the eighth session in a row and is up 15% since the beginning of July. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Trader and investor appetite has pulled back a bit late this week, on notions the U.S. and global economies may be stalling out from their rapid initial recoveries from the Covid-19-induced damage. Several Federal Reserve officials this week issued warnings that U.S. economic growth could be running out of steam amid the resurgence of Covid infections that has caused some states to shut down businesses again.

China’s currency, the yuan, has this week surged to its highest level against the U.S. dollar since March, as China’s economic recovery and growth is apparently outpacing that of the U.S. economy. It’s no secret that the Chinese government wants to unseat the U.S. dollar as the world’s reserve currency.

Safe-haven gold is benefitting from the keener worries in the marketplace as prices this week have hit a nine-year high and are closing in on the all-time high of $1,920 an ounce scored in 2011.

Said one stock market analyst in a morning email dispatch: “Fundamentals and valuations appear to be of limited influence on investors’ decision making. The fear of missing out, monetary and fiscal policy actions, low yields, lower interest rates for longer, are some of the factors that have led to this structural change in markets. If the Fed can keep zombie companies alive by keeping the lending taps open, why wouldn’t investors profit from these actions? However, the Fed cannot keep running these measures forever, and for many corporates relying on debt to stay afloat, sooner or later they will fail if they can’t return to profitability.”

The U.S. Congressional Budget Office on Wednesday reported the U.S. government spending in June was triple that of the same period last year.

The important outside markets today see Nymex crude oil prices slightly lower and trading around $40.75 a barrel. The U.S. dollar index is near steady early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.65% level.

Other U.S. economic data due for release Thursday includes monthly retail chain store sales and monthly wholesale trade.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,779.20. First resistance is seen at the overnight high of $1,825.50 and then at this week’s high of $1,829.80. First support is seen at $1,800.00 and then at $1,789.00. Wyckoff's Market Rating: 9.0

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $18.00. First resistance is seen at the overnight high of $19.445 and then at $19.75. Next support is seen at the overnight low of $19.115 and then at $19.00. Wyckoff's Market Rating: 8.5.

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.