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Gold down, silver hammered as U.S. equities see solid rebound

Kitco News

(Kitco News) - Gold prices are moderately lower in midday U.S. futures trading Tuesday, while silver prices are sharply down and hit a four-week low. The safe-haven metals saw pressure today as the U.S. stock market is staging a strong recovery from Monday’s sharp losses. February gold futures were last down $7.50 an ounce at 1,570.00.March Comex silver prices were last down $0.611 at $17.445 an ounce.

(Make sure to check out my separate special report on silver, on Kitco’s home page.)

Asian and European stock markets were mixed to weaker overnight. China markets are closed for the Lunar New Year holiday. However, U.S. stock indexes surged Tuesday, following solid losses Monday. There is still some risk aversion in the overall global marketplace as the coronavirus outbreak continues to spread in China, with over 100 dead and several thousand infected in that country, according to the latest reports. Other countries are also seeing its citizens contract the virus. This situation is far from over for the public, but from a markets-impact perspective the outbreak would likely have to significantly worsen to seriously impact prices.

Veteran traders know that shock market events like the coronavirus outbreak tend to see the markets factor in worst-case scenarios in the early stages of the affair. Price action in several markets the past few days suggests this event will be factored into most market prices sooner rather than later—and may be already factored in altogether. Reason: Most shock events to markets do not have the worst-case scenario play out. Once traders realize the shock event is not as bad (for markets) as they first thought, the markets’ prices begin to move back toward where they were before the shock occurred. Of course, right now it’s still too early to tell if the markets have fully factored in the coronavirus and its impact on the global economy. By the end of this week, traders and investors should have a better idea whether the outbreak has mostly run its course, from a markets-impact perspective.

The coronavirus outbreak has overshadowed the meeting of the Federal Reserve’s Open Market Committee (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. No change in U.S. monetary policy is expected at this week’s meeting.

The key outside markets today see crude oil prices slightly up and trading around $53.30 a barrel. Meantime, the U.S. dollar index is slightly higher and hit a two-month high overnight.

Live 24 hours gold chart [Kitco Inc.]

Technically, February gold futures bulls still have the overall near-term technical advantage as a 2.5-month-old price uptrend is in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,613.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,550.00. First resistance is seen at today’s high of $1,582.20 and then at this week’s high of $1,588.40. First support is seen at today’s low of $1,566.10 and then at 1,560.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures hit a four-week low. The silver bears have gained the overall near-term technical advantage as a downtrend has been restarted on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $17.75 and then at $18.00. Next support is seen at $17.42 and then at $17.25. Wyckoff's Market Rating: 4.0.

March N.Y. copper closed down 145 points at 258.20 cents today. Prices closed near the session low and hit another 3.5-month low today. The copper bears have the solid overall near-term technical advantage amid a steep price downdraft occurring. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 270.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the September low of 249.35 cents. First resistance is seen at today’s high of 260.85 cents and then at 262.50 cents. First support is seen at today’s low of 257.75 cents and then at 255.00 cents. Wyckoff's Market Rating: 3.0.

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.