Gold, Silver Bulls Work to Stabilize Mkts After Big Price Drops Tues.

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Aug 12, 2020 10:29 NY TimeKitco 10AM Silver Fix

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(Kitco, Wed. Aug. 12th, 2020) – Gold and silver futures prices are lower in early U.S. trading Tuesday. Spot prices are higher. The reason for the price discrepancy between futures and cash today is because the Comex gold and silver futures markets officially closed at midday Tuesday, and then in “after hours” trading Tuesday afternoon both futures markets continued to drop sharply. So the afternoon drop Tuesday is being reflected in Wednesday’s prices. Gold and silver bulls are working to stabilize prices after the Tuesday’s huge declines. October gold futures were last down $8.80 an ounce at $1,930.10. September Comex silver prices were last down $0.849 at $25.22 an ounce.

Global stock markets were mostly up in overnight trading and the U.S. stock indexes are also pointed toward higher openings when the New York day session begins. At mid-week, risk appetite is elevated and there are signs marketplace psychology is changing a bit regarding the Covid-19 pandemic. Even though most believe the Russian vaccine approval announced Tuesday is premature and a stunt by Russian President Putin, there appears to be growing notions the worst of the coronavirus may be behind—both economically and in the human toll. Nations are working feverishly on a legitimate vaccine that may be available in the fourth quarter of this year, and if not then it would likely come early next year. Some health experts are now saying that humans’ own self-defense systems may work better at fighting off Covid than most in the health profession initially expected. Major global economies are rebounding, if even some are doing it in fits and starts, and it’s becoming less likely there will be the kind of encompassing business shutdowns like those which occurred in the spring, even if the pandemic remains uncontrolled. In the U.S., Covid infection rates have fallen this week and the U.S. Congress may be inching closer to a new stimulus package for Americans.

All of the aforementioned elements are bullish for stocks and some commodities, and bearish for safe-haven U.S. Treasuries, gold and silver. Yields on the benchmark U.S. 10-year Treasury note have climbed rapidly this week and are presently fetching around 0.66% after hovering around 0.5% and near a record low just last week. Gold futures were down over $115 at one point Tuesday afternoon, while silver lost over $4.00 an ounce.

In overnight news, Euro zone June industrial output rose 9.1% from May but was down 12.3%, year-on-year. Meantime, the U.K. saw its second-quarter GDP drop 20.4%, but that reading was a bit better than expected.

The important outside markets today see Nymex crude oil prices firmer and trading around $42.25 a barrel. The U.S. dollar index is slightly down.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings, the weekly DOE liquid energy stocks report, and the monthly Treasury budget statement.

Technically, the gold bulls still have the overall near-term technical advantage, but now need to defend what is the latest “reaction low” in the still-existing price uptrend on the daily chart—today’s low of $1,865.00. A drop below that level would negate the near-term price uptrend to suggest a near-term market top is in place. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,865.00. First resistance is seen at today’s high of $1,948.40 and then at $1,975.00. First support is seen at $1,900.00 and then at $1,875.00.

September silver futures bulls still have the overall near-term technical advantage, but now need to defend what is the latest “reaction low” in the still-existing price uptrend on the daily chart—today’s low of $23.58. A drop below that level would negate the price uptrend to suggest a near-term market top is in place. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $27.50 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.58. First resistance is seen at today’s high of $26.355 and then at $26.75

Posted by :

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com