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Gold, silver see sharp downside corrections from recent gains

Kitco News

(Kitco News) - Gold and silver prices are sharply down in midday U.S. futures trading Tuesday, even as the U.S. stock market is continuing its meltdown that began last week. Heavy profit taking from the shorter-term futures traders is featured in both metals today.

Still, from a markets perspective, today’s solid losses in gold and silver are so far just downside corrections in existing price uptrends on the daily charts. Gold hit a seven-year high Monday. However, good follow-through selling pressure on Wednesday would begin to suggest near-term market tops are in place for both metals. So the bulls need to step up and show power soon. April gold futures were last down $28.50 an ounce at $1,648.20. March Comex silver prices were last down $0.716 at $18.16 an ounce.

Overseas stock markets steadied and are traded 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 started out in the green but then prices eroded as the session progressed. If the US stock market closes Tuesday at or near its daily lows, look for gold and silver to make solid rebounds Wednesday.

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 $50.50 a barrel. Meantime, the U.S. dollar index is solidly lower. 

Live 24 hours gold chart [Kitco Inc.]

Technically, April gold futures bulls still have the solid overall near-term technical advantage. A 3.5-month-old price uptrend is still 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 this week’s high of $1,691.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the January high of $1,619.60. First resistance is seen at $1,660.00 and then at today’s high of $1,666.70. First support is seen at today’s low of $1,635.10 and then at $1,625.00. Wyckoff's Market Rating: 8.0.

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls still have the slight 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 $17.50. First resistance is seen at $18.50 and then at $18.75. Next support is seen at $18.00 and then at $17.75. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed down 10 points at 257.60 cents today. Prices closed nearer the session low today. The copper bears have the overall near-term technical advantage. 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 the February low of 248.75 cents. First resistance is seen at 260 cents and then at the February high of 263.25 cents. First support is seen at today’s low of 255.85 cents and then at 254.00 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.