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One nation, under lock down, with stimulus and rate cuts for all

Commentaries & Views

Last night’s surge in gold pricing took gold future's August Comex contract to the highest trading level on a weekly chart since September 2011. However, at least on this attempt a close above $1800 was unsustainable as profit takers entered the market taking gold prices dramatically lower by the close of New York.

As of 4:36 PM EDT April futures are currently down by $19.70 and fixed at $1780.80. The intraday low was $1767.90, indicating that on technical basis no major chart damage was caused as the low remained above a trendline created from the recent intraday lows in the market creating an upward support trendline.

As you know I’ve said many times that is not if, but when gold will break and close above $1800, however the “when” was not today. Our technical studies do not indicate a change in the long-term bullish market sentiment.

Continued concerns and uncertainty as to the timeframe needed for economies worldwide to recover from the coronavirus pandemic which has been at the root cause of this global economic contraction.  On June 30, John Hopkins University reported a daily spike of 173,000 new cases worldwide, taking the total global infection rate to 10,538,577. To the CDC the total number of cases in the United States is now at 2,624,873, with a total of 127,299 deaths reported. This is an increase when compared to the previous days data of 43,644 new cases, an additional 560 deaths. 

According to the New York Times the United States reported that a record number of new cases has resulted in many states and localities have reversed or rolled back the reopening of businesses.

“New York City reversed course Wednesday and decided not to let its restaurants resume indoor service next week as originally planned. Miami-Dade County, which had already decided to close its beaches over the sweltering July 4 weekend, said that hotel pools and their lively outdoor bars would be forced to close each night at 8 p.m. And California shut down bars and halted indoor dining at restaurants in 19 counties that are home to more than 70 percent of the state’s population.”

In a Report released today, Peter Cardillo, chief market economist at Spartan Capital Securities he said, “Gold is continuing to rise reaching new historic levels setting the stage for $2,000 gold sometime this year.” 

The underlying fundamentals that have moved gold prices substantially higher have also been due to the recent action by the Federal Reserve as well as other global central banks as they attempt to combat or mitigate the major macro contraction  resulting from the forced lockdown of a large percent of the world’s population.

This Q.E. will continue as long as its root cause Covid-19 remains unchecked, which at this point it is. As long as the curve in America’s daily rate of new Covid-19 cases has not flattened and rather is still climbing in a parabolic manner the Fed will be forced to be accommodative and that will be supportive of gold.

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Wishing you as always good trading and good health,

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.