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Gold prices are firmly higher in midday U.S. trading Thursday, on some safe-haven demand amid heightened Middle East tensions, some weaker U.S. economic data and a dovish lean by the Federal Reserve this week. December gold was last up $18.00 at $2,490.10. September silver was down $0.308 at $28.635.
Middle East tensions are running even higher late this week following air strikes in Iran and Lebanon that killed senior Hamas and Hezbollah officials. The strikes are widely believed to be Israel’s doing. That has boosted safe-haven demand for gold and to a lesser degree for silver.
A weaker-than-expected U.S. manufacturing purchasing managers index for July also fell into the camp of the precious metals markets bulls, suggesting the Federal Reserve will be able to cut interest rates this fall. The 10-year U.S. Treasury note yield is falling and fell below 4.0% today, presently yielding 3.98%, which is also bullish for gold and silver.
The marketplace has digested the latest FOMC meeting’s results that left U.S. interest rates unchanged but saw the Fed and Chairman Powell lean dovish by implying the Fed can lower interest rates as soon as September, providing inflation numbers remain tamer. The marketplace is presently factoring in a 100% chance for a rate cut in September.
Meantime, the Bank England cut its main interest rate by 0.25% today.
Traders are awaiting Friday morning’s U.S. monthly jobs report for July from the Labor Department, with the key non-farm payrolls numbers seen coming in at up 185,000 versus the June gain of 206,000.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are lower and trading around $77.25 a barrel.
Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. First resistance is seen at the overnight high of $2,506.60 and then at the April high of $2,516.60. First support is seen at the overnight low of $2,474.00 and then at $2,450.00. Wyckoff's Market Rating: 7.5.
September silver futures bears have the slight overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart, but just barely now. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at the July low of $27.45. First resistance is seen at today’s high of $29.29 and then at $29.50. Next support is seen at Wednesday’s low of $28.39 and then at $28.00. Wyckoff's Market Rating: 4.5.
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Jim Wyckoff
