Gold Hits 5-Week High On Weaker Greenback, Technical Buying

(Kitco News) – Gold prices are moderately up and scored a five-week high in early U.S. trading Tuesday. Silver prices are also firmer and hit a three-week high today. Both metals are seeing buying support early this week as the U.S. dollar index has backed off. The gold market is also benefiting from an improved near-term chart posture that is inviting technical buyers. Currently, gold prices are in an uptrend on the daily bar chart. February gold futures were last up $5.20 an ounce at $1,244.90. March Comex silver was up $0.126 at $14.62 an ounce.

The key outside markets today find the U.S. dollar index solidly lower. The U.S.-China trade truce has boosted the world’s secondary currency markets early this week, which in turn is pressuring the greenback.

Meantime, Nymex crude oil prices are higher and trading around $54.00 a barrel. Some short covering is seen in the oil market recently, following steep losses. The OPEC oil cartel will meet in Vienna, Austria on Thursday. Reports said Russian and Saudi Arabian officials plan to extend production cuts. Also, Canada will curtail its crude production.

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The initial trader and investor euphoria over a U.S.-China trade dispute cease-fire for 90 days has rapidly dissipated. The marketplace has quickly realized “the devil is in the details” on getting this matter resolved. The matter will likely continue to produce uncertainty in markets, with comments from U.S. and China government officials continuing to tweak the markets—just like was the case before the meeting between Presidents Trump and Xi last weekend.

A feature in the marketplace just recently is falling U.S. Treasury yields (rising prices). The five-year T-Note yield is presently below the lower maturities. Notions of a less hawkish Federal Reserve in the coming months have helped to boost T-Bond and T-Note prices.

In overnight news, the Euro zone producer price index for October came in at up 0.8% from September and up 4.9%, year-on-year. Those numbers were hotter than expected.

The death of former U.S. President George H.W. Bush and a national day of mourning Wednesday will close the U.S. stock and financial markets. Other U.S. futures markets will remain open as normal.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, and the IBD/TIPP economic optimism index.

Technically, gold bulls and bears are on a level overall near-term technical playing field, but the bulls have momentum on their side. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the October high of $1,252.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,216.80. First resistance is seen at today’s high of $1,246.70 and then at $1,252.00. First support is seen at the overnight low of $1,235.80 and then at $1,230.00. Wyckoff’s Market Rating: 5.0

March silver futures bears still have the firm overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at $14.75 and then at $15.00. Next support is seen at the overnight low of $14.46 and then at this week’s low of $14.28. Wyckoff’s Market Rating: 3.0.

By Jim Wyckoff
For Kitco News


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