(Kitco News) – Gold prices are modestly lower in early US trading on Wednesday in sluggish mid-summer trading. However, there has been a “volatility breakdown” on the daily bar chart, suggesting that a significantly bigger move in the gold price is coming soon—possibly this week. Since gold prices are moving lower on the daily chart, the odds favor that the biggest price move is to the downside. A mid-week rebound in the US dollar and lower crude oil prices are daily bearish outside of today’s market forces. August gold futures were last down $4.90 at $1,705.80. September Comex silver futures were last down $0.013 at $18.70 an ounce.
Global stock markets were mostly up overnight. US stock indexes show mixed opens as the New York session begins. US stock index bulls have had a good week so far and have restarted short-term price uptrends on the daily charts. Corporate earnings reports are at the forefront of the stock market this week. Otherwise, summer trades are winding down amid a lack of major, fresh news.
In overnight news, Russian President Putin said Russia would honor its gas commitments to Europe, but warned that sanctions against his country could block the flow of natural gas to Europe.
Traders and investors look ahead to Thursday, when the European Central Bank will hold its regular monetary policy meeting. The ECB is expected to raise interest rates for the first time in 11 years, with many market watchers looking for a 0.5% rate hike. The US Federal Reserve is expected to raise its key interest rate by at least 0.75% at next week’s FOMC meeting.
Key external markets today see Nymex crude oil prices weaker and trading around $102.50 a barrel. The US dollar index is higher in early US trading. The yield on the 10-year US Treasury note is as high as 2.971%. 2-year and 10-year Treasury yields remain inverted mid-week, a sign of a looming US economic recession.
US economic data due out on Wednesday includes the weekly MBA mortgage applications survey, existing home sales and the weekly DOE report on liquid energy inventories.
Technically, August gold futures have the solid overall short-term technical advantage. Prices are moving lower on the daily bar chart. However, the recent “volatility collapse” on the daily bar chart (where at least three price bars in a row are significantly smaller than the previous price bars) suggests that a bigger price move is coming soon. It is important to note that markets usually fluctuate between periods of higher and lower volatility, and currently the gold market is in a period of low volatility. Bulls’ next upside price objective is to create a close above the firm resistance at $1,750.00. The Bears’ next short-term objective is to push futures prices below solid technical support at $1,650.00. First resistance is seen at this week’s high of $1,722.00 and then at $1,735.00. First support appears at $1,700.00 and then at the July low at $1,695.00. Wyckoff Market Rating: 1.5
September silver futures have solid overall short-term technical advantage as prices hit a two-year low overnight. Silver bulls’ next upside price target is a price close above the solid technical resistance at $20.00. The next bearish price objective for the bears is a price close below the solid support at $17.00. The first resistance appears at $19.00 and then at $19.36. The next support is seen at this week’s low of $18.51 and then $18.00. Wyckoff Market Rating: 1.5.
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