Gold Rebounds After Profit Taking

July 5th, 2016 by

Gold-and-Silver-BarsGold prices are rebounding this morning in New York, after profit-taking overnight pulled prices under $1,345 an ounce. Spot gold is pushing against the $1,350 mark once again this morning, while the silver spot price has pulled back under $20 an ounce after gaining 7% in Asia overnight.

While gold prices are flat to the rest of the world this morning, they are nearly $10 higher than the COMEX close on Friday.

Today we’re looking at resistance for gold at the $1,352 mark, followed by $1,357 (briefly overnight high in Asia). Support is seen at $1,340, then $1,335.

Technical numbers for silver show resistance at $20.14, then $20.42. Support comes in at $19.76, then $19.52.

Speculative longs in gold are near a 10-year high today, while shorts on WTI crude have climbed by 20%. Both Brent and WTI are down 2.5% this morning, on fears of a slowdown in China, and news that Nigeria has been able to bring some oil production back online.

Wall St opened sharply lower, following the example of the European exchanges.

The Bank of England cut capital requirements for banks today, giving them more money to lend. According to the BoE, the Brexit vote has already had a negative economic impact.

pound-burningThe dollar is flat to start the holiday-shortened week, while the pound sterling falls to new 31-year lows. The yuan fix in Beijing today was at a 5-1/2 -year low. The yen is stronger on safe haven plays after worries surfaced regarding the Chinese economy.

Treasury yields are hitting the lowest levels in history today, with the yield on the 10-year note falling to 1.377%.

Friday’s Markets

An easing of Brexit fears helped stocks lock in impressive gains for the week, while promises of summer stimulus and rate cuts from the Bank of England and European Central Bank lifted precious metals and government bonds. The Dow and S&P 500 were both up 3.2% for the week. The Nasdaq gained 3.3%.

August gold futures settled at $1,339.00 an ounce, up $18.40 (1.4%). This is “paper” gold’s highest settlement since July 2014. Prices were up a modest 1.3% for the week, but extended gold’s streak of weekly gains to five. The is the longest weekly winning streak since July 2014.

silver_bullThe superstar of precious metals, however, was silver. September silver futures posted huge gains Friday, up 96.5 cents, 5.2%, to settle at $19.588 an ounce. This is the highest settlement for silver since August 2014. This was also the largest weekly gain (10.1%) since August 2013, almost three years ago.

Year-to-date, silver futures are headed to the moon, with an astronomical gain of 42.5% as of Friday. Gold futures have gained “only” 26.59% for the year. Silver has seen triple the usual volume on COMEX, an average of 60,000 contracts a day. That’s 300 MILLION ounces of silver contracts a day.

On the spot market, gold gained $20.20 to end at $1,341.90, up 1.53%. Silver notched an impressive $1.06, closing 5.67% higher to end at $19.76. Prices came within a whisker of breaking the $20 mark during the trading day, hitting a high of $19.98

Crude futures managed to break a two-week losing streak on the weekly charts last week. Prices were helped Friday by the sixth straight week of declining oil stockpiles in the US. Reports from Baker Hughes that the US oil rig count had risen by 11, did little to cap gains.  August contracts for West Texas Intermediate settled at $48.99, 1.4% higher. The September Brent contract made its debut Friday, up 1.3% to break back above the $50 mark — $50.35.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product