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Gold down, but well off lows as Federal Reserve fires its bazooka

Kitco News

(Kitco News) - Gold prices are sharply lower in midday U.S. futures trading Thursday, but well off daily lows that saw prices hit a five-week low earlier, as the Federal Reserved has just unleashed a massive amount of short-term funding into the financial markets in an effort to increase liquidity that had become tight in recent days. Veteran market watchers are calling the Fed move a “bazooka” shot, referencing a former U.S. Treasury secretary who used the term during the U.S. government’s effort to contain the 2008 financial crisis. Silver prices are sharply down and hit an eight-month low earlier today. However, silver prices are also well up from their lows. April gold futures were last down $43.20 an ounce at $1,598.70. May Comex silver prices were last down $0.716 at $16.07 an ounce.

U.S. stock index futures are sharply down and have been locked limit down Thursday. The Dow Jones Industrial Average is having its worst day since the 1987 stock market crash. U.S. stock indexes are now in bear market territory—down more than 20% from their peaks that occurred just last month.

The European Central Bank at its meeting Thursday announced monetary policy stimulus measures to battle the negative economic effects of the Covid-19 outbreak. However, the moves were deemed as lukewarm by the marketplace. 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 Covid-19 pandemic is responsible for all of the above, and now 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.

The benchmark 10-year U.S. Treasury note sees its yield around 0.69% Wednesday, which is down from Wednesday’s reading. The U.S. dollar index is trading sharply up in midday U.S. trading, as it appears the greenback is finally getting a safe-haven bid as marketplace anxiety levels rise. Nymex crude oil prices are sharply down and trading around $31.75 a barrel.

Live 24 hours gold chart [Kitco Inc.]

Technically, April gold futures prices were near mid-range and hit a five-week low today. The bulls have lost their overall near-term technical advantage as a four-month-old price uptrend on the daily bar chart was negated today. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,619.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,650.00. First resistance is seen at $1,600.00 and then at $1,619.60. First support is seen at today’s low of $1,560.40 and then at $1,550.00. Wyckoff's Market Rating: 5.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures prices were near mid-range at midday and sunk to an eight-month low earlier. The silver bears have gained the overall near-term technical advantage as a steep price downtrend is now in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $16.40 and then at $16.665. Next support is seen at today’s low of $16.505 and then at $16.25. Wyckoff's Market Rating: 3.0.

May N.Y. copper closed down 250 points at 247.80 cents today. Prices closed nearer the session high today and did hit a three-year low early on. 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 230.00 cents. First resistance is seen at 250.00 cents and then at this week’s high of 256.55 cents. First support is seen at today’s low of 242.80 cents and then at 240.00 cents. Wyckoff's Market Rating: 1.0.

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.