Gold Up, at 2-Week High; Chart Clues Bottom In Place

(Kitco News) – Gold prices are moderately higher and hit a two-week high in early U.S. trading Monday, on decent follow-through buying from Friday’s good gains. Friday’s price action did produce a technically bullish weekly high close, which is an early clue a near-term market bottom is in place. August Comex gold was last up $6.20 an ounce at $1,233.70. September Comex silver was last up $0.182 at $16.115 an ounce.

Gold and silver markets on Monday morning are seeing the futures traders who were short the market now getting very nervous and exiting those short positions (short covering).

There was significant market news coming out of China overnight. Chinese finance officials said at a big financial meeting over the weekend they will crack down hard on excessive debt and speculation by Chinese citizens. That rattled small-cap stocks in China. The world’s second-largest economy also showed second-quarter gross domestic product growth of 6.9% from the same time last year, which is slightly above market expectations and above the official China government projections for 2017 growth.

The “outside markets” on Monday morning see Nymex crude oil futures slightly lower and trading above $46.50 a barrel. The oil market bulls had a good week last week, including a technically bullish weekly high close in Nymex crude oil last Friday that also suggests a market bottom is in place.

Meantime, the U.S. dollar index is near steady early today and did hit a 10-month low overnight. The greenback bears have the solid overall near-term technical advantage amid a price downtrend that has been in place all year long.  The slumping dollar is a bullish underlying element that is supporting the precious metals markets to start the trading week.

U.S. economic data due for release Monday is light and includes the Empire State manufacturing survey.

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

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bears still have the overall near-term technical advantage, but the bulls have momentum on their side now. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,234.70 and then at $1,240.00. First support is seen at the overnight low of $1,227.50 and then at $1,220.00. Wyckoff’s Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

September silver bears still have the firm overall near-term technical advantage. However, last Friday’s bullish weekly high close is also an early chart clue that a near-term market bottom is in place. The next upside price breakout objective is closing futures prices above solid technical resistance at $16.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.28 and then at $16.50. Next support is seen at the overnight low of $15.935 and then at Friday’s low of $15.575. Wyckoff’s Market Rating: 2.5.