Gold, Silver Can’t Escape Raw Commodity Downdraft

Gold and silver prices are modestly lower in early-afternoon U.S. trading Tuesday. Gold fell to a six-month low and silver hit a four-week low today.

The precious metals have fallen victim to a general sell off in the raw commodity sector amid fears of a major world trade war developing. Adding to downside pressure on the metals today is a surging U.S. dollar index that hit an 11-month high today. August Comex gold futures were last down $2.20 an ounce at $1,277.90. July Comex silver was last down $0.105 at $16.335 an ounce.

World and U.S. stock markets were solidly lower today as risk aversion is high after the Trump administration has threatened China with still more trade tariffs, and China has again responded with its own latest threats. The world’s two largest economies appear headed for a full-blown trade war that could significantly impact the entire world economy if the matter deteriorates.

There was some safe-haven demand seen for gold in overnight trading. However, gold and silver once again opted to trade in line with the raw commodity sector, instead of as safe-haven assets for much of the day today. I still suspect that gold will garner at least some safe-haven demand if the trade situation with major U.S. trading partners deteriorates further.

The key “outside markets” today see the U.S. dollar index higher and hitting another 11-month high today. Meantime, Nymex crude oil prices are lower and trading just below $65.00 a barrel. The sell-off in the oil has been especially bearish for the metals.

Technically, the gold bears have the overall near-term technical advantage. A nine-week-old downtrend is in place on the daily bar chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the December low of $1,251.90. First resistance is seen at today’s high of $1,286.80 and then at $1,293.10. First support is seen at today’s low of $1,272.60 and then at $1,265.00. Wyckoff’s Market Rating: 3.5

The silver bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $17.35 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at $16.50 and then at this week’s high of $16.635. Next support is seen at today’s low of $16.24 and then at $16.07. Wyckoff’s Market Rating: 3.0.

July N.Y. copper closed down 555 points at 305.10 cents today. Prices closed nearer the session low. The copper bears have the overall near-term technical advantage amid the steep sell off recently. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at 320.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 295.85 cents. First resistance is seen at 308.00 cents and then at 310.10 cents. First support is seen at today’s low of 304.10 cents and then at 301.00 cents. Wyckoff’s Market Rating: 3.5.