Gold soars on wild day amid London spot price confusion
(Kitco News) - Gold and silver prices are trading sharply up in midday U.S. trading Tuesday, but still off the daily highs scored just ahead of the U.S. futures opening. April gold futures were last up $92.50 an ounce at $1,660.20. May Comex silver prices were last up $0.984 at $14.265 an ounce.
It was a wild and wooly trading day Tuesday—especially in the early hours of the morning and just before the Comex futures market opened its day session. In very early morning trading, April Comex gold futures shot to a high of $1,698.00 and Comex silver futures shot to a high of $14.33. There was keen trader concern that London spot gold price quotes had become unreliable or had been pulled as U.K. market-makers shut down and gold mines around the globe curtailed operations due to the Covid-19 outbreak, and the U.K. government ordered the country on lock-down. Apparently, big gold traders and commercials in Europe who normally would base their trading decisions on the London spot price rushed to buy Comex gold futures when they could not get what they felt were accurate or fair London spot gold prices. Also, there are reports the supply of physical gold bullion worldwide is now hard to come by, if not almost impossible to secure in some cases. That is leading to ideas that futures traders long (buyers) the gold market in the nearby contracts could hold their positions into expiration of those contracts and thereby take delivery of physical gold, per futures contract specifications. Such a scenario seems untenable if it were to actually occur in large fashion. However that scenario does not seem likely. But neither did much of the globe being virtually locked down and economic activity grinding to a halt because of coronavirus.
Global stock markets were higher in overnight trading. U.S. stock index futures are presently sharply higher at midday. It appears the world stock markets took a more bullish stance toward the Federal Reserve’s “atomic bomb” monetary stimulus moves Monday morning than did the U.S. markets. However, the U.S. stock index futures played catch-up Tuesday.
In other news Tuesday, the U.K. is now locked down to control the Covid-19 outbreak. India’s prime minister has ordered the lockdown of its 1.3 billion people. U.S. airlines are now considering halting all flights, but many believe that won’t occur. The buzz in Washington, D.C. and around the U.S. on Tuesday is on when the U.S. will reopen for business and if “the cure is worse than the sickness” regarding coronavirus and the U.S. economy grinding to a halt. President Trump appears to be getting very uneasy the longer the economy is shut down—especially in this presidential election year.
The U.S. Congress has yet to agree on a bailout package for U.S. businesses and citizens, but an agreed-upon federal government plan could come as soon as today and seems very close to happening.
The U.S. Markit purchasing managers index (PMI) for March came in at 40.5 from 49.6 in February. That’s the steepest drop since 2009, during the financial crisis. The reading suggests the U.S. economy is already in recession. Manufacturing surveys in Europe and Japan also contracted substantially. The Euro zone Markit purchasing managers index (PMI) was 31.4 in March versus 51.6 in February. A reading below 50.0 suggests contraction in the sector.
The other important markets today see Nymex crude oil prices near steady and trading around $23.25 a barrel. The U.S. dollar index is sharply lower after hitting a 17-year high on Monday. The 10-year U.S. Treasury note yield is trading around 0.82% Tuesday.
Technically, April gold futures bulls have regained the solid overall near-term technical advantage with gains this week of around $175 in just two trading sessions. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,704.30. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of $1,560.50. First resistance is seen at today’s high of $1,698.00 and then at $1,704.30. First support is seen at $1,625.00 and then at $1,600.00. Wyckoff's Market Rating: 8.0
May silver futures bears still have the overall near-term technical advantage as a price downtrend is still in place on the daily bar chart. However, more gains this week would negated that price downtrend and suggest a market bottom is in place. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the March low of $11.64. First resistance is seen at today’s high of $14.33 and then at $14.50. Next support is seen at today’s low of $13.22 and then at $13.00. Wyckoff's Market Rating: 4.0.
May N.Y. copper closed up 905 points at 219.20 cents today. Prices closed nearer the session high today on short covering and bargain hunting. The copper bears still have the overall near-term technical advantage, but more gains this week would suggest a market bottom is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 240.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 197.25 cents. First resistance is seen at today’s high of 223.95 cents and then at 230.00 cents. First support is seen at 215.00 cents and then at 210.00 cents. Wyckoff's Market Rating: 3.0.