Gold Rallies On Weak U.S. Retail Sales Data

(Kitco News) – Gold prices are seeing a moderate rally in early U.S. trading Wednesday. Some short covering in the futures market and bargain hunting in the cash market are featured ahead of the results of the FOMC meeting that ends Wednesday afternoon. A downbeat U.S. retail sales report and a lower U.S. dollar index on the day are also working in favor of the precious metals market bulls. August Comex gold was last up $6.80 an ounce at $1,275.10. July Comex silver was last up $0.278 at $17.05 an ounce.

May U.S. retail sales were down 0.3% from April. A reading of unchanged from the April figure was expected. The weaker-than-expected data helped to pressure the U.S. dollar and also favors the monetary policy doves, who want to see U.S. interest rates remain very low.

The Federal Reserve is expected by most to slightly raise U.S. interest rates this afternoon. The marketplace is also keen to see if the Fed acts to further reduce its big balance sheet of government securities. Fed Chair Janet Yellen will hold a press conference after the FOMC meeting concludes.

Breaking news that many shots were fired and a U.S. Republican congressman, House Majority Whip Steven Scalise, and others were wounded in Virginia have so far not had a significant impact on the marketplace.

The Bank of Japan and the Bank of England also hold monetary policy meetings late this week.

The key “outside markets” on Wednesday morning see Nymex crude oil futures prices lower, following a bearish International Energy Agency report Wednesday that estimated growing U.S. crude oil production and increased world supplies. The oil market bears have the firm overall near-term technical advantage as prices trade well below $50.00 a barrel. Meantime, the U.S. dollar index is lower on the weak retail sales data. The greenback bears also hold the firm near-term technical advantage.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings, manufacturing and trade inventories, and the weekly DOE liquid energy stocks report.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls still have the overall near-term technical advantage but are fading and need to show fresh power soon. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at $1,240.00. First resistance is seen at $1,280.00 and then at $1,285.00. First support is seen at the overnight low of $1,263.50 and then at $1,260.00. Wyckoff’s Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver bulls have lost their overall near-term technical advantage amid the recent price downdraft. The next upside price breakout objective is closing futures prices above solid technical resistance at last week’s high of $17.745 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at this week’s high of $17.215 and then at $17.465. Next support is seen at the overnight low of $16.79 and then at this week’s low of $16.705. Wyckoff’s Market Rating: 5.0.