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Gold prices power to 8.5-yr high, much more upside likely

Jim Wyckoff Tuesday June 30, 2020 13:11

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(***** News) Gold prices are sharply higher and hit an 8.5-year high Tuesday, on technical buying based on very bullish charts that got even more bullish today—suggesting still more (likely much more) upside price potential to come, including new record highs. Buy stop orders were triggered in the futures market when gold prices penetrated the previous for-the-move high scored in April. August gold futures were last up $19.90 an ounce at $1,800.90. September Comex silver prices hit a four-week high today and were last up $0.571 at $18.635 an ounce.

Underlying bullish fundamentals in the gold and silver markets include safe-haven demand due to the Covid-19 pandemic that appears to be getting worse instead of better and also further damaging global economies. Also, it appears traders and investors are realizing the massive infusion of central banks’ easy money into the world financial markets the past few months will create serious problems down the road—namely problematic inflation. Metals are a historical hedge from inflation.

Global stock markets were mixed in overnight trading, on this last day of the month and of the second quarter. U.S. stock indexes are mixed to firmer at midday. Risk appetite has receded a bit recently amid the Covid-19 resurgence in many countries, including the U.S., where several hotspot states are starting to shut down businesses again.

U.S. Federal Reserve Chairman Jerome Powell is testifying to a congressional committee today. In prepared remarks, he said the U.S. economy has rebounded faster than expected from Covid-19 damage to businesses, but also said there are still challenges, most notably keeping the pandemic contained. U.S. Treasury Secretary Steven Mnuchin will also testify to the House committee today.

In overnight news, China’s government put into effect its so-called national security law to tighten its grip on Hong Kong. Meantime, there is a brewing geopolitical rift between the U.S. and Russia after reports surfaced that Russia offered the Taliban bounties to kill U.S. soldiers.

It's a holiday-shortened U.S. trading week, as markets are closed Friday for the Independence Day holiday. The U.S. economic highlight of the week will be Thursday morning’s monthly jobs report from the Labor Department. In June, the key non-farm payrolls number is expected to be up 3.15 million, with the unemployment rate forecast at 12.4%.

The important outside markets today see Nymex crude oil prices slightly weaker and trading around $39.50 a barrel. The U.S. dollar index is weaker at midday today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.

Technically, August gold futures prices were near the session high, scoring a bullish outside day up on the daily bar chart, hit an 8.5-year high and poised to close at a bullish monthly and quarterly high close on this last day of both. The bulls have the strong overall near-term technical advantage and gained more power today. Gold bulls' next upside near-term price objective is to produce a close above strong technical resistance at the all-time high of $1,920. Bears' next near-term downside price objective is pushing prices below solid technical support at last week’s low of $1,753.50. First resistance is seen at today’s high of $1,804.00 and then at $1,825.00. First support is seen at $1,789.00 and then at today’s low of $1,774.80. Wyckoff's Market Rating: 9.0

September silver futures prices were near the session high and at a four-week high. The silver bulls have the firm overall near-term technical advantage and gained fresh power today by producing a bullish upside breakout from the recent sideways trading range. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the April high of $19.125 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the June low of $17.175. First resistance is seen at $18.75 and then at $19.00. Next support is seen at $18.50 and then at $18.25. Wyckoff's Market Rating: 8.0.

September N.Y. copper closed up 310 points at 271.05 cents today. Prices closed nearer the session high today and hit a five-month high. Prices also closed at a bullish monthly and quarterly high close on this last trading day for both. The copper bulls have the solid overall near-term technical advantage. Prices are in a 3.5-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 285.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at today’s high of 272.10 cents and then at 275.00 cents. First support is seen at this week’s low of 266.80 cents and then at 265.00 cents. Wyckoff's Market Rating: 7.5