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Gold sharply up as U.S. stocks plummet in high volatility

Kitco News

(Kitco News) - Gold prices are sharply higher in midday U.S. futures trading Thursday, on keen safe-haven demand as the U.S. stock market is sharply down on the day. The coronavirus outbreak continues to roil the global marketplace. April gold futures were last up $24.30 an ounce at $1,667.40. May Comex silver prices were last up $0.154 at $17.40 an ounce.

The U.S. stock market euphoria over Democratic U.S. presidential candidate Joe Biden’s solid performance at the “Super Tuesday” primaries quickly faded Thursday as focus again turned to the uncertainty regarding the Covid-19, or coronavirus, outbreak that continues to spread worldwide and especially outside of China. This week, major corporations have suspended air travel for their employees and cancelled some conventions and conferences. There are reports of some U.S. stores running out of basic consumer goods. The state of California has declared a state of emergency due to the coronavirus illness there. On the economic front several major central banks this week have eased their monetary policies to combat the negative economic consequences of the Covid-19 outbreak. More central banks are likely to take action soon, including the European Central Bank.

Recent history shows that some days traders and investors are less concerned about the coronavirus outbreak, and then the next day they are more concerned. Look for continued vacillating markets as the Covid-19 situation plays out. It’s now looking more likely that the event will not be a short-term situation, but instead one that will play out over several months, or longer.

The benchmark U.S. 10-year Treasury note yield today fell below 0.9% to another record low. This has prompted keen concern among long-term market watchers that a U.S. and /or global economic recession looms, including the prospect of debilitating consumer and commercial price deflation.

All of the above are bearish for stocks and most commodities, and bullish for safe-haven assets like gold, the U.S. dollar and U.S. Treasuries. An examination of a chart of the Goldman Sachs Commodity index paints a dour picture for the prospects for the raw commodity sector.

The key outside markets today see Nymex crude oil prices lower and trading around $46.25 a barrel in early trading. Reports said the OPEC oil cartel is close to agreement on a collective oil-production cut to try to stem the slide in oil prices. The U.S. dollar index is trading solidly down today.

Live 24 hours gold chart [Kitco Inc.]

Technically, April gold was near the session high at midday today. The bulls have the solid overall near-term technical advantage and gained more power today amid a four-month-old price uptrend 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 February high of $1,691.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,564.00. First resistance is seen at $1,675.00 and then at the $1,691.70. First support is seen at $1,650.00 and then at today’s low of $1,635.60. Wyckoff's Market Rating: 8.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures prices were near the session high at midday today. The silver bulls and bears are back on a level overall near-term technical playing field. 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 $16.00. First resistance is seen at $17.50 and then at $17.75. Next support is seen at $17.00 and then at Tuesday’s low of $16.665. Wyckoff's Market Rating: 5.0.

May N.Y. copper closed down 130 points at 257.30 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 249.45 cents. First resistance is seen at today’s high of 260.00 cents and then at this week’s high of 262.50 0cents. First support is seen at Tuesday’s low of 254.65 cents and then at 252.50 cents. Wyckoff's Market Rating: 2.5.

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.