Gold hits all-time record high; more upside likely

Gold prices are modestly higher in midday U.S. trading Monday. December Comex gold futures today notched a record high of $2,549.90. Spot (cash) gold prices hit a new all-time high of $2,521.00 overnight. Bullish charts and safe-haven demand are driving the yellow metals prices higher and more upside is likely. Silver is sharply up and is likely to continue to be supported by gold’s price updraft. December gold was last up $7.50 at $2,545.40. September silver was up $0.531 at $29.37.

Broker SP Angel said today in a dispatch that gold prices started to climb Friday afternoon on reports China’s central bank has given new gold- import quotas to Chinese banks, “triggering speculation of a renewed wave of buying.” Chinese 10-year yields fell to record lows last week, with institutions rushing to buy over concerns of growth slowdown and deflation. “As a result, Chinese buyers are seeking alternative safe-haven protection, with gold an obvious candidate,” said the broker.

Also supporting gold are still lingering concerns about an Iranian military strike against Israel. However, it’s possible an Israeli-Hamas ceasefire agreement is close at hand. That could change Iran’s calculus on attacking Israel following recent Israeli assassinations of Hamas and Hezbollah officials.

U.S. stock indexes are higher at midday. The marketplace has significantly reduced its anxiousness regarding an impending U.S. economic recession after last week’s strong U.S. retail sales report for July. Reports said Goldman Sachs has cut its U.S. recession odds to just 20%.

Traders are awaiting the annual Jackson Hole Federal Reserve symposium that begins later this week. Past years have seen central bank officials make markets-moving pronouncements at the confab. Fed Chairman Powell is slated to speak at the symposium Thursday morning.

The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are solidly lower and are trading around $74.75 a barrel. The benchmark 10-year U.S. Treasury note is presently fetching around 3.85%.

Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,450.00. First resistance is seen at the overnight contract/record high of $2,549.90 and then at $2,575.00. First support is seen at today’s low of $2,523.70 and then at $2,500.00. Wyckoff's Market Rating: 8.5.

September silver futures bulls and bears are on a level overall near-term technical playing field. Bulls have momentum on their side 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 $27.50. First resistance is seen at $30.00 and then at $30.50. Next support is seen at the overnight low of $28.78 and then at $28.50. Wyckoff's Market Rating: 5.0

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Jim Wyckoff

Time to Buy Gold and Silver