Gold, Silver Prices Rocket Higher As World Gov’t Bonds Yields Plummet

Gold, Silver Prices Rocket Higher As World Gov’t Bonds Yields Plummet

Date: 07/08/2019

Jim Wyckoff Wednesday August 07, 2019 13:20

Kitco News

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(Kitco News) – Gold and silver prices are sharply higher at midday Wednesday, with gold hitting a six-year high and trading well above the key $1,500.00 level. Silver prices scored a 13-month high of $17.145, basis December Comex futures. Traders and investors worldwide are on edge at mid-week as world government bond yields took a dramatic dive today. Safe-haven demand continues to boost the two precious metals. December gold futures were last up $32.60 an ounce at 1,517.10. September Comex silver prices were last up $0.68 at $17.13 an ounce.

The yield on the benchmark U.S. Treasury note dropped to 1.61% today, with government bonds in Europe also seeing their yields slide sharply, especially the safe-haven German bond (bund), whose yield hit a record low today. Some veteran market watchers compared today’s big down-moves in bond yields to the bond price action that was seen during the 2008 financial crisis.

The U.S. stock market sold off to extend the recent sharp declines, while crude oil prices tumbled today.

The U.S.-China trade war is being blamed for the market turbulence recently. It appears the ramifications of the trade war, combined with the already anemic growth in many of the world’s major economies, has sparked a “race to the bottom” for world government bond yields. Bond traders are reckoning central banks will continue to ease their monetary policies by lower interest rates even further, including those central banks that already have pushed interest rates into negative territory. New Zealand, India and Thailand central banks cut their interest rates Wednesday. Bets are now that the Federal Reserve will soon lower its interest rate again.

China’s central bank on Wednesday set its currency, the yuan, exchange rate with the U.S. dollar at 6.9996. That’s the lowest fixing set by the central bank in 11 years, but still just below the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored by the world marketplace, as China is already being accused of using its currency as a trade weapon. The U.S. designated China as a currency manipulator earlier this week.

Technically, December gold futures prices closed nearer the session high today. The bulls have the strong overall near-term technical advantage. A nine-week-old uptrend is in place on the daily bar chart. There are still no early chart clues to suggest a market top is close at hand. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,550.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,467.00. First resistance is seen at today’s high of $1,522.70 and then at $1,525.00. First support is seen at $1,500.00 and then at today’s low of $1,484.30. Wyckoff’s Market Rating: 9.5.

September silver futures prices closed near the session high today. The silver bulls have the solid overall near-term technical advantage and gained more power today. A 10-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.50 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 today’s high of $17.145 and then at $17.25. Next support is seen at $16.75 and then at $16.685. Wyckoff’s Market Rating: 8.5.

September N.Y. copper closed up 165 points at 257.45 cents today. Prices closed nearer the session high on more short covering after hitting a 2.5-year low on Monday. The copper bears have the solid overall near-term technical advantage. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 268.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at this week’s high of 257.80 cents and then at 260.00 cents. First support is seen at this week’s low of 253.15 cents and then at 252.00 cents. Wyckoff’s Market Rating: 1.0.

By Jim Wyckoff