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(Kitco News) - Gold prices are up a bit and silver near steady in quieter summertime trading early Thursday. A slightly lower U.S. dollar index, slightly higher crude oil prices and a mild dip in U.S. Treasury yields are all friendly daily "outside" elements for the precious metals markets. The charts are also near-term bullish for gold and silver. August gold was last up $2.60 at $1,983.40 and September silver was down $0.007 at $25.38.
Asian and European stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. The U.S. stock indexes Wednesday hit new highs for the year amid upbeat trader and investor attitudes. U.S. inflation is trending lower and the U.S. economy is not too hot and not too cold.
Here is my mid-summer take on key markets:
--U.S. dollar depreciation: The U.S. dollar index this week hit a 15-month low. Veteran market watchers know that trends in the currency markets tend to be stronger and longer-lasting than price trends in other markets. Look for the USDX to continue to trend lower until at least early September. After the U.S. Labor Day holiday in early September, market participants will get back down to more serious business, what with summer vacations over and the kids back in school. Markets can become more volatile in September, so the price downtrend in the U.S. dollar index could accelerate, or reverse. Until then, the path of least resistance for the USDX will remain sideways to lower—barring an unexpected geopolitical event that would likely drive safe-haven demand into U.S. dollars.
--U.S. stock indexes trending up: The U.S. stock indexes have been trending higher since early May and this week hit new highs for the year. So much for the old stock market adage, "Sell in May and go away." The uptrends in the stock indexes have been unassuming and with low volatility. Those are signs the uptrends can continue in the coming weeks—at least until early September. Veteran stock market traders know the months of September and October can be rocky ones for the equities market.
--Crude oil prices on the rise: Nymex crude oil futures prices in mid-July hit a 2.5-month high and are presently trending higher. That’s a bullish element for most of the raw commodity sector. Rising oil prices also suggest the general marketplace thinks the U.S./global economy will not slip into recession in the coming months. It appears Nymex crude will continue to trend up in the coming weeks. However, there is strong chart resistance at the $82.00 to $85.00 area that will likely cap gains.
--Gold and Silver bulls come to life: The past couple weeks have seen the gold and silver markets negate their near-term price downtrends on the daily charts and begin price uptrends. The eroding U.S. dollar index, easing inflation fears and a rally in crude oil prices are bullish elements for the precious metals that should continue to support sideways-to-higher price action into the end of summer.
--Government bond yields have dipped: Notions of "light at the end of the tunnel" regarding hawkish major central banks and their interest rate hikes have stabilized government bond yields and even allowed some to decline a bit. This is due to inflationary pressures easing over the past several months. Look for the trajectory of inflation to continue to be down until at least September. That means likely declining government bond yields in the coming weeks, albeit probably just modest dips.
--Grain market bulls coming back to life: The grain market bulls are back in business this week amid weather forecasts for the U.S. Midwest that are turning hotter and drier as the calendar turns to August, and amid the end of the Russia-Ukraine grain-shipping deal this week. Russia attacked a major Ukraine grain terminal earlier this week to add keener uncertainty regarding any grain shipments coming out of the Black Sea region. Technicals are presently fully bullish for soybeans, turning more bullish for corn, and neutral to slightly bearish for wheat. However, if the corn and soybean markets continue to rally, wheat markets will very likely follow suit. The month of August is the most critical growing month of the U.S. soybean crop. So look for soybeans to be the leader of the grain markets in the coming weeks.
In overnight news, China’s central bank left its main interest rates unchanged.
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| There is no doubt gold is going higher, but investors should be looking at the miners - Sprott's Ryan McIntyre |
The key outside markets today see the U.S. dollar index slightly down. Meantime, Nymex crude oil prices are slightly up trading around $75.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.786%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, existing home sales and leading economic indicators.
![Live 24 hours gold chart [Kitco Inc.]](/images/live/gold.gif?0.2924175530478188){kind=small}
Technically, the gold futures bulls have the slight overall near-term technical advantage. Prices are in a fledgling uptrend on the daily bar chart. 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 $1,900.00. First resistance is seen at the overnight high of $1,989.80 and then at $2,000.00. First support is seen at Wednesday’s low of $1,973.30 and then at Tuesday’s low of $1,958.10. Wyckoff's Market Rating: 5.5
![Live 24 hours silver chart [ Kitco Inc. ]](/images/live/silver.gif)
The silver bulls have the firm overall near-term technical advantage. A three-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at the April high of $26.645. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the overnight high of $25.475 and then at $26.00. Next support is seen at $25.00 and then at this week’s low of $24.815. Wyckoff's Market Rating: 7.0.
