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Gold, silver prices up as buyers step back into markets

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(Kitco News) - Gold and silver prices are trading solidly higher in early U.S. trading Friday. The precious metals prices are rallying as more confident buyers are stepping in after the markets had been pounded down recently on a “sell what you can” trader mentality that also pervaded many other markets earlier this week. The buying in gold and silver late this week is likely safe-haven demand, along with short covering in the futures market following the recent big losses. April gold futures were last up $22.70 an ounce at $1,503.30. May Comex silverprices were last up $0.481 at $12.62 an ounce.

Global stock markets were mostly higher in overnight trading. U.S. stock index futures are presently pointed toward solidly higher openings when the New York day session begins. Trading today will be extra important for the overall marketplace, from a psychological perspective. After Thursday’s gains, if the U.S. stock indexes can on Friday put together a two-day winning streak for the first time in weeks, then many traders and investors will head into the weekend thinking the markets panic has now passed and most markets have at least stabilized.

Make no mistake, the economic and human toll from the Covid-19 pandemic will continue to rise, and likely dramatically on both counts. California is headed for a complete lockdown of its citizens, and some health officials are predicting the most populous state in the U.S. (and the world’s fifth- largest economy) will see up to half of its population infected by the illness.

Many economists are now saying U.S. GDP will drop by over 10% for at least one quarter—and that could be light, given most U.S. stores are presently shuttered.

Two key markets, U.S. Treasuries and gold, are late this week providing key clues the marketplace panic is over and that markets are stabilizing--even if there is more downside in the stock market and much more downside in the global economy in the coming weeks.

The U.S. Treasury bond futures market has seen prices rebound solidly late this week (yields falling). It appears the U.S. Treasury market has become more liquid as the week has progressed. Treasury buyers are stepping back into the fray with more confidence in the bond market. It seems contradictive that bond yields would be falling while trader and investor fears are easing a bit. However, the rally in the Treasury futures and falling yields in the cash market suggest more economic and stock market damage are expected by bond traders, and thus the safe-haven moves to own U.S. Treasuries. The benchmark U.S. 10-year Treasury note yield was trading around 1.04% Friday morning.

The U.S. dollar index early Friday morning has backed down from its massive gains seen this week that saw the USDX hit a three-year high. It’s likely just a corrective pullback and certainly not signal the USDX has hit a peak. The rush to hold greenbacks has further roiled an already anxious foreign exchange market. This week’s price action in the USDX reaffirms the U.S. dollar’s status as the supreme-quality asset to own when times get really, really tough.

Nymex crude oil futures prices are solidly up again early today and have made a dramatic rebound after hitting an 18-year low of $20.06 a barrel on Wednesday. Crude prices are currently trading around $27.50 a barrel. The huge rebound in crude late this week does suggest that important market has put in a price bottom.

U.S. economic data due for release Friday includes is light and includes existing home sales. In a sign of the times, this week’s Federal Reserve FOMC meeting came and went with nary a mention on the business news channels and completely ignored by the marketplace. The Fed has been actively intervening in the markets all week, including last weekend’s surprise interest rate cut.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,550.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,450.90. First resistance is seen at the overnight high of $1,519.40 and then at $1,535.00. First support is seen at $1,475.00 and then at the overnight low of $1,457.50. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $13.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $11.00. First resistance is seen at the overnight high of $13.095 and then at $13.23. Next support is seen at $12.00 and then at this week’s low of $11.64. Wyckoff's Market Rating: 2.0.

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.