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Gold, silver weaker as global risk aversion recedes Monday

Kitco News

(Kitco News) Gold prices are moderately lower in midday U.S. futures trading Monday, after scoring a three-week high overnight. The safe-haven metal sees pressure from a rebound in the U.S. stock market to start the trading week, as well as solid gains in the U.S. dollar index. Silver prices were sharply down today as daily volatility in that market has heated up recently. It could be that on “risk-off” days silver is getting hit by a double-dose of less safe-haven demand and also on worries about less global demand for the metal if indeed the coronavirus does crimp major economies. April gold futures were last down $7.10 an ounce at $1,580.70. March Comex silver prices were last down $0.387 at $17.625 an ounce.

Asian stock markets were lower overnight, led by sharp losses in mainland China stocks as those markets reopened for the first time in over a week, due to the Lunar New Year holiday last week. The Shanghai stock index lost nearly 8% on the day—the biggest drop in 4.5 years. European stock markets were mostly up Monday.

The coronavirus outbreak in China that has spread to other parts of the world remains in focus early this week. Latest counts show 17,500 Chinese citizens afflicted with over 350 dead, with air travel to China being significantly curtailed and global and domestic business there disrupted. Gold did briefly bounce back a bit around midday when news reports said a Carnival Cruise passenger had contracted the virus. It’s been an up-and-down daily trading affair for many markets the past two weeks, regarding the coronavirus outbreak. Judging from the European and U.S. stock markets’ gains Monday, at least on this day the present situation appears to be factored into market prices. That’s a negative for gold and silver prices.

The key outside markets today see crude oil prices down and trading around $50.80 a barrel. Reports overnight said Saudi Arabia is mulling a “drastic” temporary oil-production cut due to the coronavirus outbreak. OPEC ministerial officials may meet this week to discuss the matter. Meantime, the U.S. dollar index is higher on a corrective bounce from solid losses seen last Friday. These key “outside markets” were in a bearish posture for the precious metals markets today.

Technically, April gold futures today scored a bearish “outside day” down on the daily bar chart after hitting a three-week high overnight. The bulls still have the overall near-term technical advantage as three-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 $1,619.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,550.00. First resistance is seen at $1,585.00 and then at today’s high of $1,598.50. First support is seen at today’s low of $1,573.20 and then at last week’s low of 1,567.90. Wyckoff's Market Rating: 6.5

Live 24 hours gold chart [Kitco Inc.]

March silver futures also scored a bearish “outside day” down on the daily bar chart. The silver bulls and bears are on a level overall near-term technical playing field amid choppy trading conditions. A fledgling downtrend line is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $18.375 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 $18.00 and then at today’s high of $18.125. Next support is seen at $17.50 and then at last week’s low of $17.28. Wyckoff's Market Rating: 5.0.

Live 24 hours silver chart [ Kitco Inc. ]

March N.Y. copper closed down 90 points at 250.85 cents today. Prices closed nearer the session low and hit a more-than-four-year 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 265.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 240.00 cents. First resistance is seen at 255.00 cents and then at 257.00 cents. First support is seen at today’s low of 248.75 cents and then at 245.00 cents. Wyckoff's Market Rating: 1.0.

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.