Gold a bit lower, caught in the vortex of "sell what you can"
(Kitco News) - Gold prices at midday are modestly lower in choppy and sometimes volatile U.S. futures trading Monday, after hitting a seven-year high above $1,700.00 overnight. Risk aversion is very high to start the trading week. Global stock markets are melting down, while currency and commodity markets are in turmoil. Many traders of multiple markets were probably blindsided by the mammoth price moves in many markets Monday, prompting them to de-leverage and forcing them to sell markets that they could, including gold and silver. There’s an old trading adage that during keen market turmoil and high anxiety, when traders can’t sell what they want they sell what they can. April gold futures were last down $4.20 an ounce at $1,667.80. May Comex silver prices were last down $0.358 at $16.905 an ounce.
Global stock, commodity and financial markets were jolted overnight following the surprise weekend news that Saudi Arabia said it would drastically lower its crude oil prices and pump more crude oil following a failed OPEC meeting in which Russia refused to lower its crude production. Nymex crude oil prices fell to a four-year low of $27.34 a barrel overnight before coming well off those lows but still trading down nearly $8.00 a barrel at around $33.50. The one-day loss in crude oil prices is the biggest in almost 30 years, dating back to the 1991 first gulf war.
Global stock markets sold off sharply overnight and the U.S. stock index futures are sharply lower at midday. At one point in morning trading, the Dow Jones Industrial Average was down over 2,000 points. However, the U.S. stock indexes are off their daily lows at midday.
The benchmark 10-year U.S. Treasury note saw its yield dive to a record low of 0.387% overnight, and its currently trading around 0.5%. The U.S. 30-year Treasury bond’s yield dropped below 1.0% overnight. U.S. Treasury bond futures overnight at one point saw prices trade over 13 points higher. For perspective, a one-point move in T-Bond prices (32/32) is normally consider a big move.
The U.S. dollar index is trading sharply lower and hit a 13-month low Monday. The Japanese yen has soared on the foreign exchange market, while the Australian dollar plunged in value.
The Saudi-Russia oil-price war is the second shock to hit the global marketplace this year, as traders and investors are still dealing with the high anxiety of the coronavirus, or Covid-19 outbreak that continues to spread. Reports over the weekend said half of Italy is on lockdown, while more cases and deaths have been reported in the U.S. The state of New York has declared a state of emergency because of the outbreak. Business events in the U.S. are now being cancelled and some companies have banned employee travel on airlines.
More and more, it appears the global economy is spiraling into recession and a bear market in equities. Young investors have never experienced a bear market in stocks, which will especially unnerve them. Look for the major central banks to take more action—possibly as soon as Monday—to try to mitigate the collapsing stock markets and assuage very shaky consumer confidence.
The silver market is getting hit harder Monday, along with many other raw commodity markets, amid the collapse in crude oil prices and notions of global economic recession crimping industrial demand for silver. The specter of consumer and commercial price deflation is also curtailing buying interest in the precious metals markets.
Technically, April gold prices were nearer the session low at midday today. The bulls have the solid overall near-term technical advantage and more upside is likely in the near term. A choppy four-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 today’s high of $1,704.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,625.00. First resistance is seen at $1,680.00 and then at the January high of $1,691.70. First support is seen at today’s low of $1,658.00 and then at $1,650.00. Wyckoff's Market Rating: 8.0
May silver futures near mid-range at midday today. The silver bears have gained the overall near-term technical advantage. 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 today’s high of $17.615. Next support is seen at today’s low of $16.55 and then at the February low of $16.40. Wyckoff's Market Rating: 4.0.
May N.Y. copper closed down 565 points at 250.55 cents today. Prices closed near mid-range today and hit a three-year low. The copper bears have solid the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 263.95 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 today’s high of 253.50 cents and then at 257.70 0cents. First support is seen at today’s low of 245.65 cents and then at 242.50 cents. Wyckoff's Market Rating: 1.0.