Kitco News: Gold Prices Power To 6-Yr High; Markets On Edge

Goldbully · August 5, 2019 5:01AM

Gold Prices Power To 6-Yr High; Markets On Edge

Jim Wyckoff Monday August 05, 2019 08:21

(Kitco News) - Gold prices are sharply up and hit a six-year high in early U.S. trading Monday. Safe-haven demand is featured amid an escalating U.S.-China trade war and unrest in Hong Kong. December gold futures were last up $15.20 an ounce at 1,472.80. September Comex silver prices were last up $0.215 at $16.485 an ounce.

Asian and European stock markets tumbled overnight, amid heightened worries about an escalating trade war between the world’s two largest economies—the U.S. and China. U.S. stocks are set to open solidly lower when the New York day session begins.

The Chinese currency, the yuan, depreciated to a new record low against the U.S. dollar Monday, at 7.1087 to the dollar. This is leading to ideas China has thrown in the towel on any trade agreement with the U.S. coming anytime soon. China’s central bank appeared to condone the decline in its currency, saying the yuan’s fall is the result of U.S. protectionism and that the yuan remains stable. In the past, China’s central bank had stepped in to boost the yuan when it reached 7 to the dollar.

President Trump announced late last week that on September 1 he will slap another 10% tariff on Chinese imports into the U.S. Trump on Monday morning tweeted that China is manipulating its currency and that the U.S. Federal Reserve had better take note of it.

The U.S. stock market has dropped, U.S. Treasury futures prices have hit new contract highs, the yield on the 10-year U.S. Treasury note has dropped well below 2.00%, the U.S. dollar has dropped, and grains and crude oil prices have also fallen.

The escalation of the U.S.-China trade war has other implications, too, including significantly increasing the likelihood the Federal Reserve will again lower U.S. interest rates in the coming months.

Major protesting in the streets of Hong Kong also has the world marketplace uneasy to start the trading week.

The key “outside markets” today see Nymex crude oil prices weaker and trading just above $55.00 a barrel. The U.S. dollar index is also weaker.

U.S. economic data due for release Monday includes the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, and the employment trends index.

Technically, the gold bulls have the strong overall near-term technical advantage and gained more power today. A 10-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing December futures prices below solid technical support at $1,425.00. First resistance is seen at today’s high of $1,473.90 and then at $1,480.00. First support is seen at $1,467.00 and then at $1,454.00. Wyckoff's Market Rating: 8.5

September silver futures bulls have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the July high of $16.685 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at last week’s low of $15.935. First resistance is seen at today’s high of $16.59 and then at $16.685. Next support is seen at $16.25 and then at the overnight low of $16.135. Wyckoff's Market Rating: 7.5.

https://www.kitco.com/news/2019-08-05/Gold-Prices-Power-To-6-Yr-High-Markets-On-Edge.html