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Gold prices sharply up as panic in marketplace recedes

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(Kitco News) - Gold prices are trading sharply higher in midday U.S. trading Tuesday, as the panic selling pressure seen across most markets Monday appears to be letting up--at least for now. Ironically, that’s been bullish for safe-haven gold. The “sell what you can” attitudes experienced just recently (and which put strong selling pressure into the gold and silver markets) appear to have been replaced by “sell what you want.” The less panic in the marketplace Tuesday is actually prompting fresh safe-haven buying in gold because traders and investors now have the increased confidence to step in and buy something, and because this global health crisis and economic crisis are by no means near being over. April gold futures were last up $41.20 an ounce at $1,527.70. May Comex silver prices were last down $0.271 at $12.535 an ounce.

Gold also saw support Tuesday the aftermath of the Federal Reserve announcing it is reopening its emergency commercial paper funding program that was used in the 2008 financial crisis. There had been rumors and reports this week that the short-term U.S. credit system was not liquid and dislocations were being experienced. The move by the Fed also supported the U.S. stock market as prices rallied after the Fed news. A news conference by President Trump and his health team also somewhat assuaged traders and investors.

In overnight news, the closely watched German ZEW economic expectations index for March came in at -43.1 versus -15.7 in February and market expectations for a March reading of -30.0.

One positive note in this dire scenario laid out above is that North Americans appear to be taking the coronavirus outbreak much more seriously than many had initially reckoned. Pundits a couple weeks ago were saying North Americans could not be shut in like the Chinese were forced to do by their government. The dramatic shift in the psychology of North American citizens in just a week’s time is a testament to their resolve. China’s economy and commerce are reported to be starting to recover after its citizens were shut in for a few weeks.

One more potential positive on this matter could be that a vaccine for the virus could come much sooner than health experts are now forecasting. This long-time market watcher/reporter covered the energy markets during the 1991 first Gulf War. When Iraqi leader Saddam Hussein and his army were driven out of Kuwait by coalition forces, Saddam set fire to most of the hundreds of Kuwaiti oil wells. The massive fires showed up as big black spots on satellite photos of the entire Middle East. Oil experts said it would be many months or even a couple years before all those fires could be extinguished. Coalition firefighters had all those fires put out in about a month’s time. Sometimes even experts can be well off the mark on their forecasting.

The benchmark 10-year U.S. Treasury note sees its yield around 0.88% Tuesday, which is well above what was seen Monday. That’s a positive for trader and investor confidence. The U.S. dollar index is strongly higher in midday U.S. trading. Nymex crude oil prices are weaker and trading around $28.00 a barrel.

Live 24 hours gold chart [Kitco Inc.]

Technically, April gold futures bears still have the firm overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,600.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at this week’s low of $1,450.90. First resistance is seen at today’s high of $1,554.30 and then at $1,554.00. First support is seen at $1,500.00 and then at $1,475.00. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures prices were near mid-range and poised to close at an 11-year low close today. The silver bears have the solid overall near-term technical advantage as a steep price downtrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $14.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at Monday’s low of $11.77. First resistance is seen at today’s high of $13.23 and then at $13.50. Next support is seen at today’s low of $12.11 and then at $12.00. Wyckoff's Market Rating: 1.0.

May N.Y. copper closed down 720 points at 232.10 cents today. Prices closed nearer the session low today and hit a three-year low. The copper bears have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 250.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 220.00 cents. First resistance is seen at 240.00 cents and then at today’s high of 242.55 cents. First support is seen at today’s low of 231.25 cents and then at 230.00 cents. Wyckoff's Market Rating: 1.0.

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