Both precious metals are supported by the drop in the U.S. Dollar Index, which reached a three-week low today, and by the fall in U.S. Treasury bond yields mid-week. December gold rose $13.80, trading at $3,412.30. September silver rose $0.553, to $38.55.
The gold and silver markets are also experiencing buying interest, as more Wall Street firms forecast that the Federal Reserve will begin cutting U.S. interest rates in September, given the weakening labor market and relatively moderate inflation. The Fed is likely to reduce the federal funds rate by 25 basis points at the September FOMC meeting, followed by two more cuts in December and March, according to economists at Nomura. Markets are also pricing in Fed rate cuts, indicating a reduction in September and preparing for another cut in December. U.S. consumer price data released on Tuesday showed that the core reading (excluding food and energy) increased by 3.1% year-over-year in July, slightly above market expectations but not considered problematic.
The Bank of Thailand cut its key interest rate today and signaled that it will maintain an accommodative stance, as the increase in U.S. tariffs could trigger a prolonged period of economic weakness. The central bank’s Monetary Policy Committee unanimously voted on Wednesday to lower the one-day repurchase rate by 25 basis points to 1.5%. This decision was not a surprise. The Bank of Thailand has implemented a total of 100 basis points in rate cuts as part of a loosening cycle that started last October.
The major external markets today are seeing the U.S. Dollar Index lower, with crude oil prices slightly down, trading around $62.25 per barrel. The benchmark 10-year U.S. Treasury bond yield currently stands around 4.23%.
Technically, the bulls in December gold futures have a solid short-term technical advantage. The next bullish target for the bulls is to close above solid resistance at $3,500.00. The next short-term bearish target is to push prices below the solid technical support at the July low of $3,319.20. First resistance is seen at $3,425.00, then at $3,450.00. First support is seen at this week’s low of $3,379.10, then at $3,350.00. Wyckoff Market Rating: 7.0.
The bulls in September silver futures also have a solid short-term technical advantage. The next bullish target for silver bulls is to close above solid technical resistance at the July high of $39.91. The next bearish target for the bears is to close below solid support at the July low of $36.28. First resistance is seen at last week’s high of $38.875, then at $39.00. Next support is seen at $38.00, then at this week’s low of $37.515. Wyckoff Market Rating: 7.0.
Kitco