Gold down as traders sell what they can amid panicked marketplace
(Kitco News) - Gold prices are lower in early U.S. futures trading Thursday as markets liquidity in a panicky global marketplace is drying up as traders and investors back away from trading markets. “When in doubt, get out” is the mantra today. U.S. stock index futures are presently locked limit down ahead of the opening of the New York day session. Silver prices are sharply down and hit an eight-month low. April gold futures were last down $16.30 an ounce at $1,625.70. May Comex silver prices were last down $0.421 at $16.36 an ounce.
Global stock markets were sharply lower overnight. U.S. stock indexes are now in bear market territory—down more than 20% from their peaks that occurred just last month.
The Covid-19 pandemic has the global marketplace in panic. President Trump’s Oval Office speech to the American citizens Wednesday night seemed to cause further unease in the markets when he announced no major economic stimulus measures, saying that’s up to the U.S. Congress. On Wednesday evening the NBA basketball league suspended its season after a player contracted coronavirus. The CME Group has closed its trading floors; however, most futures markets have been trading electronically for years. Movie stars Tom Hanks and his wife announced on Twitter they have tested positive for the illness. There are scattered reports the U.S. Treasury markets are becoming stressed.
Following is an edited version of Thursday morning email dispatch from a market analyst: “Markets are in complete crisis mode; past economic data has zero influence on investors’ decisions; central bank emergency easing policies are not being effective and politicians’ actions are only adding more confusion. The one thing that investors are monitoring is how fast the coronavirus is spreading. President Trump’s address to the nation last night was underwhelming. It shows that the U.S., like many other countries, is unable to provide the right action in response to the virus spread. A global recession seems impossible to escape and a massive decline in corporate earnings is inevitable. What is even more worrying is the risks that come with such a recession. Corporates across the globe are over-leveraged after more than a decade of low interest rates, and companies with weak balance sheets are extremely vulnerable to such economic shocks.“
The European Central Bank at its meeting Thursday is expected to announce monetary policy stimulus measures to battle the negative economic effects of the Covid-19 outbreak. With ECB interest rates already below zero, the central bank has limited options on stimulus. At this point, some economists are saying the Euro zone gross domestic product will decline 1.2% in 2020.
The benchmark 10-year U.S. Treasury note sees its yield around 0.68% Wednesday, which is well down from Wednesday’s reading. The U.S. dollar index is trading solidly up in early U.S. trading, as it appears the greenback is getting a safe-haven bid as marketplace anxiety levels rise. Nymex crude oil prices are sharply down and trading around $31.25 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the producer price index. Traders and investors are paying little attention to economic reports, at present.
Technically, the gold bulls still have the firm overall near-term technical advantage amid a choppy 3.5-month-old price uptrend in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,704.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at today’s high of $1,651.00 and then at $1,660.00. First support is seen at today’s low of $1,615.90 and then at $1,600.00. Wyckoff's Market Rating: 7.0
March silver futures bears have gained the overall near-term technical advantage amid a price downtrend that has been restarted on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $17.615 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 today’s high of $16.91 and then at $17.00. Next support is seen at today’s low of $16.225 and then at $16.00. Wyckoff's Market Rating: 4.0.