(Kitco News) – Gold prices are solidly higher and near daily highs in early U.S. trading Wednesday, following the just-released prepared text from Federal Reserve Chairman Jerome Powell for his speech to the U.S. House of Representatives. Powell cited several concerns regarding the U.S. economy that traders are deeming dovish on monetary policy. August gold futures were last up $7.20 an ounce at 1,407.90. September Comex silver prices were last up $0.128 at $15.27 an ounce.
Powell is his text said since the June FOMC meeting uncertainties, including world trade tensions, global growth and very low inflation, continue to cloud the outlook for the U.S. economy and these matters are not improving. He said the U.S. economic outlook is solid, but the prospects for other major world economies are worrisome. The marketplace is reading his remarks as dovish on U.S. monetary policy, which in turn strongly suggest the Fed will cut U.S. interest rates sooner rather than later, and possibly later this month. That’s a bullish scenario of the precious metals markets.
Asian and European stock markets were mostly weaker in more subdued trading overnight. U.S. stock indexes are pointed toward moderately lower openings when the New York day session begins.
In overnight news, China’s June consumer price index was reported up 2.7%, year-on-year, which was in line with market expectations. However, the food prices component of the report rose by 8.3% annually.
The key “outside markets” today see Nymex crude oil prices higher and trading around $59.00 a barrel. The U.S. dollar index is lower and near its daily low after Powell’s prepared remarks were released.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, monthly wholesale trade and the weekly DOE liquid energy stocks report.
Technically, the gold bulls have the overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart is still in some jeopardy. Bulls need to show more power soon to keep it alive. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the June high of $1,442.90. Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at last week’s low of $1,384.70. First resistance is seen at $1,420.00 and then at $1,425.00. First support is seen at $1,400.00 and then at the overnight low of $1,391.80. Wyckoff’s Market Rating: 7.0
September silver futures bulls have gained the slight overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.625 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.70. First resistance is seen at $15.35 and then at $15.50. Next support is seen at today’s low of $15.07 and then at $15.00. Wyckoff’s Market Rating: 5.5.
By Jim Wyckoff
For Kitco News