Gold Price At 3-Week High Amid Assault On Greenback

July 21, 2017

New York (July 21)  Gold prices are moderately up and scored a three-week high in early U.S. trading Friday. The precious metals continue to catch a bid from a bleeding U.S. dollar index, which fell to a 13-month low overnight. Gold bulls have technical momentum to suggest prices will continue to trend sideways to higher in the near term. August Comex gold was last up $3.40 an ounce at $1,248.90. September Comex silver was last up $0.105 at $16.45 an ounce.

Weaker U.S. stock indexes in pre-U.S. day-session action are also a mildly supportive daily element for the safe-haven gold market.

It appears the “take away” from this week’s news events and markets’ price action is growing notions the major central banks of the world are not in a big hurry at all to tighten their monetary policies, with a major reason being very tame price inflation expectations. European Central Bank President Mario Draghi on Thursday sounded a surprisingly dovish tone on ECB money policy. The Bank of Japan on Thursday lowered its inflation expectations. And the week before, Fed Chair Janet Yellen spoke before the U.S. Congress and suggested the Fed will only very gradually raise U.S. interest rates.

The aftermath of less hawkish rhetoric coming from world central bankers has seen U.S. stock indexes hit record highs, world government bond yields have dropped, the Euro currency has rallied to a 14-month high, and the U.S. dollar index has hit a 13-month low. Gold has also seen a decent rally the past couple weeks.

In overnight news, a poll of Euro zone forecasters predicted a 1.5% annual inflation rate for the Euro zone, which is well below the 2.0% annual inflation target the ECB wants. This continues a general theme of worldwide price inflation that is not problematic.

The other important “outside market” on Friday morning sees Nymex crude oil futures slightly higher and trading above $47.00 a barrel. Recent upside price action suggests a market bottom is in place for oil. However, my bias is that crude oil prices will remain trapped in a choppy and sideways trading range between $40 and $50 a barrel in the coming months.

There is no major U.S. economic data due for release Friday.

KitcoNews

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