Gold Up, At 4-Wk. High, Despite Strong Gains In U.S. Dollar

(Kitco News) - Gold and silver prices arehigher in early-afternoon U.S. trading Thursday, but down from their dailyhighs. Still, both metals are showing surprising and impressive resilience inthe face of a strong surge in the U.S. dollar index today. Gold prices hit afour-week high and silver hit a seven-week high today. August Comex gold futures were last up $5.80 an ounce at $1,307.10. July Comex silver was last up$0.244 at $17.235 an ounce.

Goldand silver both saw short covering in the futures markets, along with bargainhunting and maybe even some safe-haven demand.

Thegold market’s gains today, amid the strong U.S. dollar, are another clue theyellow metal has put in a near-term bottom and can now trade at least sideways,if not sideways to higher, in the near term.

Thebig news of the day saw the European Central Bank’s Governing Council leave itsinterest rates unchanged, as expected. However, policymakers announced theyenvision ending the bond-buying program, which is referred to as quantitativeeasing (QE), at the end of 2018. “The GoverningCouncil expects the key ECB interest rates to remain at their present levels atleast through the summer of 2019 and in any case for as long as necessary toensure that the evolution of inflation remains aligned with the currentexpectations of a sustained adjustment path,” said a policy statementfrom the ECB.

TheU.S. dollar index dramatically reversed course and rallied after the ECB news,after being under good selling pressure overnight. While the ending of QEappears hawkish, currency traders beat the Euro currency down on the wordingthat the ECB intends to keep interest rates at present levels through at least2019. The ECB also today downgraded its economic growth forecasts for the Eurozone.

Reportssay the Trump administration is set to levy a new batch of tariffs on Chineseimports as soon as Friday. It is expected that China would again retaliate withits own tariffs on U.S. imports. Commodity market prices have been hit byworries of a full-blown trade war between the leading economies of the world.However, this matter is bullish for safe-haven gold and silver markets.

Theother key “outside market” today finds Nymex crude oil prices near steady andtrading just below $67.00 a barrel.

Technically,gold bulls have gained the slight near-term technical advantage, and they havemomentum late this week. Gold bulls' next upside near-term price breakoutobjective is to produce a close in August futures above the May high of$1,332.40. Bears' next near-term downside price breakout objective is pushingprices below solid technical support at the May low of $1,286.80. Firstresistance is seen at today’s high of $1,313.00 and then at $1,320.00. Firstsupport is seen at $1,300.00 and then at the June low of $1,293.10. Wyckoff'sMarket Rating: 5.5

Julysilver futures bulls have the overall near-term technical advantage. Silverbulls' next upside price breakout objective is closing prices above solidtechnical resistance at the April high of $17.425 an ounce. The next downsideprice breakout objective for the bears is closing prices below solid support at$16.75. First resistance is seen at today’s high of $17.35 and then at $17.425.Next support is seen at $17.11 and then at $17.00. Wyckoff's Market Rating:6.5.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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