Gold sees normal price pullback in a strong uptrend
(Kitco News) - Gold prices are moderately down in early U.S. trading Thursday, with silver prices sharply lower. These are normal corrective price pullbacks in still-strong uptrends on the charts. Once again, look for bulls to step in to buy the dips and do some bargain hunting. August gold futures were last down $8.20 an ounce at $1,945.20. September Comex silver prices were last down $0.956 at $23.38 an ounce.
The marketplace Thursday morning got its first look at second-quarter U.S. gross domestic product and it was not at all pretty, coming in at down a stunning 32.9% from the first quarter. Analysts had forecast 1Q GDP to be down just shy of 35% from the first quarter. Today’s number is the worst quarterly GDP reading since it began being recorded in 1947, and beats the previous quarterly downturn by three-fold. Earlier today Germany released its 2Q GDP and it came in at -10.1% from 1Q and down 11.7%, year-on-year. Those numbers were the worst on record, dating back 50 years.
Global stock markets were mostly lower in overnight trading. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Market participants are in a gloomier mood Thursday. The Covid-19 pandemic death toll in the U.S. has climbed above 150,000 and the anticipated “second wave” of infections appears to be a foregone conclusion at this point.
U.S. traders and investors are also focused on some somber comments made by Fed Chairman Jerome Powell on Wednesday afternoon, at his press conference following the FOMC meeting that saw no change in U.S. monetary policy. “It looks like the data are pointing to a slowing pace of the recovery,” said Powell, citing evidence of a pullback by consumers and a slowdown in the rehiring of furloughed workers, particularly by small businesses. Today’s 12,000 rise in U.S. jobless claims from last week’s number corroborates a weakening of the economic recovery process.
U.S. stock indexes had been supported recently by corporate earnings reports that have generally beat market expectations.
Meantime, the U.S. Congress is nowhere close to agreeing on a new stimulus package for Americans, heading into their August recess.
The important outside markets today see Nymex crude oil prices weaker and trading around $40.65 a barrel. The U.S. dollar index is a bit higher today after hitting a nearly two-year low on Wednesday. The yield on the benchmark U.S. Treasury 10-year note is currently trading around the 0.55% level.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, expected to show a figure of around 1.5 million new claims in the latest week.
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 $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,880.00. First resistance is seen at the overnight high of $1,965.10 and then at this week’s record high of $1,974.90. First support is seen at the overnight low of $1,936.40 and then at $1,900.00. Wyckoff's Market Rating: 9.5
September silver futures bulls have the strong overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $26.275 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at the overnight high of $24.58. Next support is seen at the overnight low of $23.10 and then at this week’s low of $22.46. Wyckoff's Market Rating: 8.0.