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Gold prices see normal downside correction in strong uptrend

Kitco News

(Kitco News) - Gold and silver prices are solidly down in early U.S. futures trading Tuesday, as the global stock and financial markets have stabilized for the moment, following Monday’s rout in equities markets. Still, from a markets perspective, today’s losses in gold and silver are so far just normal downside corrections in price uptrends that are still in place on the daily charts. April gold futures were last down $23.30 an ounce at $1,653.20. March Comex silver prices were last down $0.481 at $18.395 an ounce.

Global stock markets have steadied and are trading mixed Tuesday, following Monday’s strong selling pressure that wiped out all of the U.S. stock market’s gains for 2020, including seeing the Dow Jones Industrial Average lose over 1,000 points. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The key questions on traders’ and investors’ minds are: Have the markets now fully factored in the coronavirus impact on the global economy? Or, “will the next shoe drop” soon?

Here is the latest on the coronavirus outbreak (covid-19). China has over 80,000 confirmed cases, with 508 new cases Tuesday and 71 new deaths to push the total above 2,700. Reports say China may postpone its annual National People’s Congress in March. More than 1,200 cases have been confirmed in 30 countries outside of China. South Kore has 84 new cases and nine deaths. A crew member of Korean Air has tested positive for coronavirus. Northern Italy sees 12 towns quarantined amid 229 cases confirmed and seven deaths. Japan has 160 coronavirus cases. Still, the World Health Organization says it is too early to call the outbreak a pandemic, although other health experts are calling it such. United Airlines says U.S. citizens traveling to China are now near zero.

Financial and currency markets are starting to price in expected future easing of monetary policies by the major central banks of the world, due to the covid-19 outbreak. Fed funds futures markets show an 86% chance the Federal Reserve will lower U.S. interest rates by July. The 10-year U.S. Treasury Note yield is nearing a historic low and is currently fetching around 1.35%.

The key outside markets today see crude oil prices lower and trading around $51.00 a barrel. Meantime, the U.S. dollar index is slightly lower but not too far below last week’s nearly three-year high.  

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly house price index, the S&P-Case-Shiller home price index, the Richmond Fed business survey, and the consumer confidence index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the solid overall near-term technical advantage. A 3.5-month-old price uptrend is in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,620.00. First resistance is seen at the overnight high of $1,666.70 and then at $1,675.00. First support is seen at $1,640.00 and then at the overnight low of $1,635.10. Wyckoff's Market Rating: 8.0.

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the January high of $18.895 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $18.00. First resistance is seen at the overnight high of $18.64 and then at $18.75. Next support is seen at the overnight low of $18.23 and then at $18.00. Wyckoff's Market Rating: 6.5.
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.