Paper Shorts Capitulating As Gold Holds Near Two-Week High

Jim Wyckoff  Monday July 17, 2017 13:51

(Kitco News) - Gold prices ended the U.S. day session moderately higher and hit a two-week high Monday. Gold and silver have recently seen the futures traders who were sold short those markets getting very nervous and exiting those short positions (short covering). The precious metals market bulls are also seeing renewed buying support from a weakening U.S. dollar index that fell to a 10-month low Monday. August Comex gold was last up $6.30 an ounce at $1,233.80. September Comex silver was last up $0.172 at $16.105 an ounce.

China, the world’s second-largest economy and largest raw commodity importer, saw its second-quarter gross domestic product grow by 6.9% from the same time last year, which is slightly above market expectations and above the official China government projections for 2017 growth. This is also good news for the precious metals market bulls.

The “outside markets” on Monday morning saw Nymex crude oil futures slightly lower and trading just above $46.00 a barrel. The oil market bulls had a good week last week, including a technically bullish weekly high close in Nymex crude oil last Friday that suggests a market bottom is in place.

Meantime, the U.S. dollar index is traded near steady today and did hit a 10-month low overnight. The greenback bears have the solid overall near-term technical advantage amid a price downtrend that has been in place all year long.

Technically, August gold futures prices closed nearer the session high today. While the gold bears still have the overall near-term technical advantage, last Friday’s bullish weekly high close is an early chart clue 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 $1,235.40 and then at $1,240.00. First support is seen at today’s low of $1,227.50 and then at $1,220.00. Wyckoff's Market Rating: 4.0

September silver futures prices closed near mid-range today. While the silver bears have the solid overall near-term technical advantage, Friday’s bullish weekly high close begins to suggest a near-term market bottom is in place. Prices are still in a five-week-old downtrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $16.50 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 $16.28 and then at $16.50. Next support is seen at $15.575 and then at $15.25. Wyckoff's Market Rating: 2.5.

September N.Y. copper closed up 350 points at 272.60 cents today. Prices closed nearer the session high and hit a 3.5-month high today. The copper bulls have the overall near-term technical advantage and gained more power today. 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 today’s high of 273.75 cents and then at 275.00 cents. First support is seen at 270.00 cents and then at today’s low of 268.35 cents. Wyckoff's Market Rating: 6.5.