Gold Prices Bounce On Fed Speak, Weaker USDX, US Stocks

(Kitco News) – Gold prices are moderately up in early-morning U.S. trading Wednesday. Dips in the U.S. dollar index and the U.S. stock market at mid-week are providing a bit of support for the safe-haven metals. Some “Fed speak” overnight also aided the metals market bulls. June gold futures were last up $3.30 an ounce at $1,276.50. July Comex silver prices were last up $0.06 at $14.47 an ounce.

World stock markets were mixed overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Risk appetite among traders and investors has been a bit keener this week, as the U.S.-China trade war rhetoric from both sides has died down the past few days.

In overnight news, St. Louis Federal Reserve Bank President James Bullard said in a speech in Hong Kong late Wednesday that the U.S. central bank may need to lower interest rates if inflation levels continue at very low levels. The Federal Reserve would like to see annual U.S. inflation around the 2% level. Bullard is a voting member of the Federal Open Market Committee (FOMC). This news is also friendly for the precious metals markets, which in recent years have seen their prices react positively to a more accommodative U.S. monetary policy.

In another sign of worldwide inflation that is very low, or even problematic, Germany’s government auctioned 10-year bonds (bunds) for an average yield of -0.07%. That’s the lowest yield in almost three years.

The key “outside markets” today see the U.S. dollar index slightly down but still not far below this year’s high, which is a two-year high. Meantime, Nymex crude oil prices are also weaker and trading around $62.50 a barrel.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the FOMC minutes and the weekly DOE liquid energy stocks report. U.S. Treasury Secretary Steven Mnuchin also speaks to a U.S. House committee today.

Technically, the gold bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,300.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,267.30. First resistance is seen at this week’s high of $1,278.80 and then at $1,287.00. First support is seen at this week’s low of $1,269.00 and then at $1,267.30. Wyckoff’s Market Rating: 4.0

July silver futures bears have the solid overall near-term technical advantage. Prices are in a three-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $14.175. First resistance is seen at $14.50 and then at $14.555. Next support is seen at this week’s low of $14.35 and then at $14.30. Wyckoff’s Market Rating: 2.0.

By Jim Wyckoff
For Kitco News


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