Gold prices power to 7.5-year high

June 24, 2020

London (June 24)  Gold  prices are modestly higher in early U.S. trading Wednesday after pushing to a 7.5-year high of $1,796.10 overnight, before backing off a bit. Safe-haven demand is featured this week amid a troubling rise in Covid-19 infections around the globe. Importantly, the technical charts for gold and silver are fully bullish (especially in gold), suggesting still more upside price potential for both metals in the near term. August gold futures were last up $5.40 an ounce at $1,787.10. July Comex silver prices were last down $0.183 at $17.88 an ounce.

European stock markets were down in overnight trading, while Asian bourses were mixed. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Trader and investor risk sentiment is less upbeat at mid-week, amid a troublesome rise in Covid-19 infections in some parts of the world, including some U.S. states. This has intensified the debate on whether the rise in infections will result in a renewed lockdown of businesses that would mean further damage to recovering economies.

Gold prices are also being boosted on notions the easy-money-infused major economies of the world are presently only on “sugar high” rebounds and a sober reckoning will occur down the road.

In other overnight news, Germany’s closely watched Ifo business sentiment index rose by a record amount in June, coming in at 86.2 from 79.7 in May. “German business sees light at the end of the tunnel,” said the Ifo report. This is just the latest piece of data suggesting major global economies are healing much faster than most economists had expected.

The important outside markets today see Nymex crude oil prices lower and trading around $39.50 a barrel. The U.S. dollar index is up early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.7% level. For perspective, the 10-year German government bond (the bund) is presently yielding -0.44%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the house price index, and the weekly DOE liquid energy stocks report. Also today the International Monetary Fund issues its world economic outlook report.

Technically, the gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,753.50. First resistance is seen at the overnight high of $1,796.10 and then at $1,800.00. First support is seen at $1,775.00 and then at Tuesday’s low of $1,758.30.


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