Roundup Price gains for gold, silver amid weaker USDX, lower bond yields

Gold and silver prices are higher in early U.S. trading Monday, as traders are eyeing the bullish daily aspects of a weaker U.S. dollar index and falling U.S. Treasury bond yields to start the trading week. October gold futures were last up $8.70 at $1,788.90. September Comex silver futures were last up $0.418 at $20.255 an ounce.

Global stock markets were mixed to slightly up overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session beings. Corporate earnings reports will be in focus for stock traders this week. We are in the “dog days” of summer, whereby trading volumes in many markets wane as traders and investors step away from markets and take family vacations. Much of Europe is on vacation during August. Markets are likely to be mostly quieter until after the U.S. Labor Day holiday in early September.

Traders are still digesting last Friday morning’s U.S. jobs report for July, which showed a strong rise of 528,000 in non-farm payrolls. A gain of around 260,000 was expected. After Friday’s strong jobs numbers, notions of the Federal Reserve easing up on its aggressive monetary policy tightening were somewhat dashed. Most in the marketplace still look for another 0.75% rate hike from the Fed in September.

Jobs report a ‘game changer’ for gold price, focus shifts to next week’s inflation numbers
Traders are still watching China’s military exercises near Taiwan. A Wall Street Journal headline reads, “China’s military exercises showcase modern fighting force preparing for possible war in the Taiwan Strait.” This news is also likely keeping a modest safe-haven bid in the gold market.

The key outside markets today see Nymex crude oil prices lower and trading around $87.75 a barrel. Crude oil on Friday hit a 4.5-month low. The U.S. dollar index is slightly lower in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching around 2.818%. The 2-year U.S. T-note yield is 3.209, which has the yield curve still inverted and is one clue the U.S. is in or headed toward economic recession.

U.S. economic data due for release Monday is light and includes the employment trends index.

Technically, the October gold futures bears have the overall near-term technical advantage. However, a fledgling price uptrend is still in place on the daily bar chart to suggest a market bottom is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,850.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at the August high of $1,801.00 and then at $1,825.00. First support is seen at the overnight low of $1,776.20 and then at $1,769.80. Wyckoff’s Market Rating: 3.5

September silver futures bears have the overall near-term technical advantage. However, recent price gains suggest a market bottom is in place. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $21.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at the August high of $20.51 and then at $20.75. Next support is seen at $20.40 and then at the overnight low of $19.745. Wyckoff’s Market Rating: 3.0.