Gold prices pushed to a three-week high overnight. Bullish metals traders are looking at the demand side of the equation, and a more permanent U.S.-China trade truce would likely result in increased world economic growth, meaning more demand for precious metals. February gold futures were last up $8.30 an ounce at $1,234.40. March Comex silver was up $0.278 at $14.50 an ounce.
Risk appetite is back in full force to start the trading week, following the weekend news out of the G20 meeting in Argentina that the U.S. and China have agreed on a cease-fire in their trade war. Asian and European stock markets rallied sharply, while crude oil prices were also posting good gains on hopes for better world economic growth if the two largest economies stop their trade hostilities. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins.
The U.S. dollar index is weaker as secondary world currencies were boosted Monday, including the Chinese yuan, on the U.S.-China truce. That’s a bullish outside market force for the metals markets. There are notions a U.S.-China trade agreement would lessen demand for the safe-haven greenback.
The positive outcome of the weekend U.S.-China trade meeting was not completely unexpected by the marketplace, as expectations on the results had varied widely. Still, the outcome was at the least better than many expected. The U.S. and China gave each other 90 days to make further progress on their trade tiff.
The U.S.-China trade cease-fire gave traders and investors a double-barrel shot of upbeat news, following last week’s surprisingly dovish comments coming from Federal Reserve Chairman Jay Powell.
In other news, the OPEC oil cartel meeting is getting under way in Vienna, Austria. Reports said Qatar plans to pull out of the cartel in January. Oil prices were also lifted in part on comments from Russian and Saudi Arabian officials that they want to extend production cuts.
The death of former U.S. President George H.W. Bush over the weekend gives the U.S. financial markets an unexpected mid-week closure on Wednesday, for a national day of mourning.
U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers index (PMI), construction spending, the ISM manufacturing report on business, the global manufacturing PMI and domestic auto industry sales.
Technically, gold bears have still the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the October high of $1,252.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the November low of $1,202.40. First resistance is seen at today’s high of $1,237.80 and then at $1,245.00. First support is seen at the overnight low of $1,226.60 and then at $1,220.00. Wyckoff’s Market Rating: 4.0
March silver futures bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at $14.66 and then at $14.75. Next support is seen at the overnight low of $14.28 and then at last week’s low of $14.185. Wyckoff’s Market Rating: 2.5.
The SPDR Gold Shares (GLD) was trading at $116.60 per share on Monday afternoon, up $1.06 (+0.92%). Year-to-date, GLD has declined -5.70%, versus a 4.80% rise in the benchmark S&P 500 index during the same period.
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