Gold, Silver Prices Back In Rally Mode Amid Bullish Charts

Gold and silver prices are moderately higher in early U.S. trading Wednesday. The precious metals bulls are enjoying very constructive price charts that continue to invite traders to the long side of the markets. August gold futures were last up $5.80 an ounce at 1,427.50. September Comex silver prices were last up $0.129 at $16.60 an ounce.

The mainstream business media is starting to pick up on the recent rallies in gold and silver markets. The Wall Street Journal just ran a feature story entitled, “Gold’s Luster is Spreading to Other Precious Metals.” At first blush a metals trader could view this as bullish, as it gives the metals more exposure to potential traders/investors. That may well be true. However, long-time market watchers also remember the old trading adage that says when the general public starts to pick up on a market’s significant price move, that move is then probably near an end.

Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session beings.

European shares were pressured by a weak economic report. The Euro zone purchasing managers index (PMI) composite reading came in at 51.5 in July versus expectations for a figure of 52.1. The manufacturing PMI was worse, coming in at 46.4 in July versus expectations for a number of 47.6. Any reading below 50.0 suggests contraction in the sector. German government bond yields dropped to a record low following the weak report. The German manufacturing PMI came in at 43.1 in July. Germany’s economy is the workhorse of the Euro zone.

U.S. trader and investor attitudes are still generally upbeat at mid-week on news the U.S. and China have restarted their heretofore stalled trade talks, with U.S. officials traveling to China soon for fresh negotiations.

The European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $57.00 a barrel. Meantime, the U.S. dollar index is near slightly weaker after hitting a five-week high overnight.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. flash manufacturing PMI, the services PMI, new residential sales and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls still have the solid overall near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,500.00. Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,400.00. First resistance is seen at this week’s high of $1,431.40 and then at $1,442.00. First support is seen at this week’s low of $1,414.60 and then at $1,410.00. Wyckoff’s Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

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 $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.625. First resistance is seen at the July high of $16.625 and then at $16.75. Next support is seen at the overnight low of $16.35 and then at this week’s low of $16.195. Wyckoff’s Market Rating: 8.0.


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