Gold prices steady as U.S. stock mkt set to open sharply down
(Kitco News) - Gold prices are trading near steady in early U.S. trading Wednesday, as the U.S. stock indexes are set to open the day session solidly lower. Trader and investor attitudes have become more downbeat at mid-week. June gold futures were last up $2.40 an ounce at $1,598.90. May Comex silver prices were last down $0.056 at $14.10 an ounce.
The just-released ADP national employment report for March came in at down 37,000 jobs, which was better than most expected. However, traders are overlooking this report, and will likely do the same with Friday morning’s employment report from the Labor Department, as neither reflect the current jobless rate amid the coronavirus-induced American lock-down. The more important report of the week will be Thursday’s weekly jobless claims report, which is more up-to-date.
On this first day of April and of the second quarter, global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. The first quarter saw the U.S. stock market see its biggest losses in 12 years.
Traders and investors are gloomier Tuesday following President Trump’s daily Covid-19 update late Tuesday afternoon, in which he delivered a more somber assessment of the situation. Trump said from 140,000 to 240,000 Americans will die from the illness, and that’s if citizens continue their distancing and home isolation. He said it’s going to be a “very rough” next couple weeks as the coronavirus is likely to peak in mid- to late-April. A best-case scenario appears to be the U.S. economy starting back up in May.
In overnight news, China got some more positive economic data Wednesday, as the Caixin manufacturing purchasing managers index (PMI) in March rose to 50.1 compared to 40.3 in February. A reading above 50.0 suggests growth in the sector. This news is a positive for those economies hit so hard by the coronavirus, as China’s economy has been able to stage a very swift recovery. However, more and more market watchers and media outlets are questioning the reliability of statistics coming out of China, especially those suggesting how fast its economy recovered from the coronavirus outbreak.
The Euro zone manufacturing PMI for March came in at 44.5, which was in line with market expectations and compares with February’s reading of 49.2.
The important outside markets today see Nymex crude oil prices lower and trading around $20.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are respected energy analysts saying there is still significantly more near-term downside potential in Nymex crude oil, amid a supply glut and a demand shock. The U.S. dollar index is solidly higher early this morning as the bulls are having a strong week. The 10-year U.S. Treasury note yield is trading around 0.61% Tuesday morning—down from Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. manufacturing PMI, the global manufacturing PMI, domestic auto industry sales, the ISM manufacturing report on business, construction spending and the weekly DOE liquid energy stocks report.
Technically, the gold bulls still have the overall near-term technical advantage but they are fading this week and need to show fresh power soon. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,650.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,550.00. First resistance is seen at the overnight high of $1,612.40 and then at $1,625.00. First support is seen at today’s low of $1,576.00 and then at $1,565.00. Wyckoff's Market Rating: 6.0
May silver futures bears have the overall near-term technical advantage. 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 this week’s high of $14.71 and then at $15.00. Next support is seen at this week’s low of $13.945 and then at $13.50. Wyckoff's Market Rating: 4.0.