Gold Hits 3-Wk High Amid Eroding US Dollar, Trump Troubles

Jim Wyckoff  

Tuesday July 18, 2017 13:09

(Kitco News) - Gold prices were ending the U.S. day session moderately higher and hit a three-week high Tuesday. A solidly lower U.S. dollar index that hit a 10-month low is supporting the precious metals markets. A major defeat for U.S. President Trump on health care reform also helped out the safe-haven gold market today. August Comex gold was last up $7.90 an ounce at $1,241.60. September Comex silver was last up $0.156 at $16.26 an ounce.

The Trump administration was dealt another major blow Tuesday when Republican lawmakers pulled from consideration their latest health care reform package, due to lack of support to pass the measure. The health care reform failure calls into serious question the success of any other big initiatives Trump has promised to push through Congress.

The U.S. dollar index dropped sharply on the news. A languishing Trump administration in the coming months could impact U.S. monetary policy by prompting the Federal Reserve to hold off on further interest rate increases.

Remember that the first few months after Trump was elected president in November the marketplace was enthralled with notions of big economic changes with the new president. Now, those ideas seem like folly. Many market watchers are now wondering what will happen to the U.S. stock market if the U.S. president and Congress see continued gridlock.

The “Trump rally” that helped push stock indexes to record highs over the past several months was due in large part to the big infrastructure spending and other pro-business initiatives espoused by Trump. It stands to reason at least some of the air will begin to come out of the stock market balloon if Trump can’t get anything done with Congress. Such would be a bullish scenario for the gold market, which is a competing asset class with equities.

The other “outside market” on Tuesday saw Nymex crude oil futures slightly higher and trading above $46.00 a barrel. Recent upside price action suggests a market bottom is in place for oil. A bottom in oil prices would be a bullish development for the entire raw commodity sector, including the precious metals.

Technically, August goldd futures prices closed nearer the session high today. While the gold bears still have the overall near-term technical advantage there are chart clues that a near-term bottom is in place. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,243.90 and then at $1,250.00. First support is seen at today’s low of $1,232.20 and then at this week’s low of $1,227.50. Wyckoff's Market Rating: 4.0

September silver futures prices closed nearer the session high and hit a two-week high today. While the silver bears still have the overall near-term technical advantage recent price action begins to suggest a near-term market bottom is in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.50 and then at $16.75. Next support is seen at $16.00 and then at $15.575. Wyckoff's Market Rating: 3.0.

September N.Y. copper closed up 60 points at 273.00 cents today. Prices closed nearer the session high and closed at a 3.5-month high close today. The copper bulls have the overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 284.95 cents. The next downside price objective for the bears is closing prices below solid technical support at 260.00 cents. First resistance is seen at this week’s high of 273.75 cents and then at 275.00 cents. First support is seen at 270.00 cents and then at this week’s low of 268.35 cents. Wyckoff's Market Rating: 6.5.