Gold Prices Power To 9-Week High, More Upside Likely
(Kitco News) - Gold bullstoday got a quadruple dose of bullish fuel that boosted prices to nine-weekhighs and above the recent sideways trading range. Today’s surprising gains ingold set the table for sideways-to-higher price action at least into the end ofthe year. December gold futures were last up $32.70 an ounce at $1,226.20.December Comex silver was last up $0.269 at $14.60 an ounce.
Hereare the elements that today powered the gold market sharply higher and couldcontinue to provide support for at least the near term:
1.Safe-haven demand for the yellow metal was featured amid steep sell-offs inworld stock markets that have spooked traders and investors around the globe.
2.A very tame U.S. inflation report also boosted the metals markets. The U.S.consumer price index report for September came in at up a scant 0.1% fromAugust, while expectations were for a 0.2% rise. Gold prices pushed to whatwere then their daily highs on the data, which suggests U.S. inflation is notat all problematic and also hints the Federal Reserve could back off theaccelerator on raising U.S. interest rates.
3.A lower U.S. dollar index today also worked in favor of the precious metalsbulls. The tame CPI report, the shaky U.S. stock market and ideas the Fed mayback off on raising interest rates pressured the greenback.
4.Technical buying in gold kicked in big-time today as buy stop orders weretriggered in the futures market after key chart resistance levels werepenetrated on the upside. Also, today’s price action produced a big and bullishupside “breakout” from a sideways trading range on the daily bar chart, to nowsuggest a price uptrend can be sustained.
Globalstock markets were hammered lower overnight, following the U.S. stock-marketpounding that took place Wednesday. China’s stock market dropped over 5% andhit a four-year low overnight. U.S. stock indexes were mixed as of this writingThursday afternoon after hitting three-month lows earlier today. You werewarned in this report on Monday that the U.S. stock indexes were showing earlyclues of topping out. Price action Wednesday and today now more stronglysuggest the U.S. stock indexes have put in near-term tops, if not major tops.Such is a bullish development for the competing hard assets like the metals.
Thesharp decline in the Chinese yuan against the U.S. dollar is in focus againlate this week. The depreciating yuan makes China’s exports cheaper on theworld market, but it also invites capital outflows from China. The U.S. haswarned China about using its currency to gain world trade advantages.
Thekeen risk aversion now in the marketplace is also due in part to rising worldgovernment bond yields, with the implications being rising inflation along withthe negative impact on global stock markets. U.S. Treasury prices are actuallyhigher today, on safe-haven demand.
Discussionamong traders and investors now is whether the Fed will take its foot off thegas on raising U.S. interest rates. President Trump on Wednesday, following theU.S. stock market sell-off, said “the Fed is making a mistake” and “I think theFed has gone crazy.” Such rhetoric from the U.S. president will surely garnerthe attention of the Fed’s FOMC members who set interest rate policy.
Theother key outside market today finds November Nymex crude oil prices sharply lowerand trading below $72.00 a barrel on concerns about slowing world economic growththat would mean less demand for oil.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.2924175530478188)
Technically,gold prices today saw a bullish upside “breakout” from the sideways tradingrange on the daily bar chart. This suggests a price uptrend can now besustained, probably at least into the end of this year. Gold bulls' next upsidenear-term price breakout objective is to produce a close above solid technicalresistance at $1,250.00. Bears' next near-term downside price breakoutobjective is pushing prices below solid technical support at this week’s low of$1,186.00. First resistance is seen at $1,230.00 and then at $1,240.00. Firstsupport is seen at $1,218.00 and then at $1,210.00. Wyckoff's Market Rating:5.0
![Live 24 hours silver chart [ Kitco Inc. ]](http://www.kitco.com/images/live/silver.gif)
Thesilver bears still have the overall near-term technical advantage. Silverbulls' next upside price breakout objective is closing prices above solidtechnical resistance at the October high of $14.95 an ounce. The next downsideprice breakout objective for the bears is closing prices below solid support atthe September low of $13.965. First resistance is seen at today’s high of$14.65 and then at $14.75. Next support is seen at this week’s low of $14.255and then at $14.195. Wyckoff's Market Rating: 3.0.
DecemberN.Y. copper closed up 215 points at 280.25 cents today. Prices closed nearerthe session high today after hitting a three-week low early on. The copperbears have the overall near-term technical advantage. Copper bulls' next upsideprice objective is pushing and closing prices above solid technical resistanceat the 290.00 cents. The next downside price objective for the bears is closingprices below solid technical support at the August low of 257.45 cents. Firstresistance is seen at this week’s high of 282.00 cents and then at 285.00cents. First support is seen at today’s low of 277.20 cents and then at 275.00cents. Wyckoff's Market Rating: 3.5.
By Jim WyckoffFor Kitco News
Follow @jimwyckoff
jwyckoff@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.