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Gold Up On Weak U.S. Dollar, Geopolitics

Jim Wyckoff  

Kitco News

 (Kitco News) - Gold prices are moderately higher in early U.S. trading Tuesday, supported by weaker U.S. dollar and some safe-haven demand amid an uptick in U.S.-North Korea tensions. December Comex gold was last up $4.90 an ounce at $1,269.50. September Comex silver was last up $0.109 at $16.36 an ounce.

North Korea has threatened to use its nuclear weapons against the U.S. after the United Nations slapped more sanctions on the rogue nation. This matter won’t just go away and will likely get worse before it gets better. Such is likely to continue to be an underlying bullish element for the gold market.

The U.S. dollar index is weaker in early U.S. trading Tuesday. The index has been trending lower all year long and the bears possess the strong near-term technical advantage. The rally in the dollar index late last week has fizzled.

Meantime, Nymex crude oil futures are slightly up and trading just below $50.00 a barrel. Reports overnight said OPEC leader Saudi Arabia is planning to reduce its oil exports to Asia. OPEC members are meeting this week in Abu Dhabi.

There was some downbeat economic data coming out of Germany and China. China’s imports were up 11% in July versus up 17% in June. China’s exports were up 7.2% versus up 11.3% in June. Germany’s trade surplus grew in June, but its imports and exports declined. This news is a mixed bag for the metals, as it falls into the camp of the monetary policy doves of the world, which is bullish for the metals. However, China is the world’s largest raw commodity importer, and less demand for commodities from China is bearish.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the NFIB small business index, and the IDB/TIPP economic optimism index.

Technically, December gold futures bulls have the overall near-term technical advantage and needed to show some fresh power. Bulls’ next upside technical objective is pushing prices above chart resistance at last week’s high of $1,280.30. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,250.00. First resistance is seen at the overnight high of $1,271.00 and then at $1,275.00. First support is seen at the overnight low of $1,262.70 and then at last week’s low of $1,259.80. Wyckoff’s Market Rating: 6.0

September silver bears have the overall near-term technical advantage. The next upside price breakout objective is closing futures prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at the overnight high of $16.41 and then at $16.50. Next support is seen at Monday’s low of $16.095 and then at $16.00. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News



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