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Gold prices sharply up amid Goldilocks environment for the metal

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(Kitco News) - Gold prices are trading sharply up in early U.S. trading Monday, as the global marketplace has seen in uptick in sentiment to start the trading week, on reports the coronavirus outbreak may be de-escalating. This somewhat encouraging news appears to be a goldilocks scenario for gold, as buyers are more confident to step in and purchasing the safe-haven metal, while knowing there are still very tough times ahead, including the specter of problematic inflation farther down the road. June gold futures were last up $24.00 an ounce at $1,670.00. May Comex silver prices were last up $0.306 at $14.80 an ounce.

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The coronavirus outbreak that has crippled the global economy appears to be de-escalating a bit, according to some models that forecast the peak number of cases and deaths. However, the coming week is going to be “our Pearl Harbor moment, our 9/11 moment,” said U.S. Surgeon General Jerome Adams, regarding an expected wave of coronavirus deaths across the U.S. New York City, the U.S. Covid-19 epicenter, New Orleans and Detroit face especially tough days ahead.

The debate in the coming days, especially if the Covid-19 outbreak starts to de-escalate, will be when to restart the global economies. Traders and investors are also handicapping then the world economies will get back to full speed when they do start back up in earnest. There are complicated supply chains that have been severely disrupted the past few weeks.

Reports say the U.S. Treasury market and short-term securities market are operating more smoothly than a couple weeks ago, following the Federal Reserve’s massive injection of liquidity into those markets.

The important outside markets today see Nymex crude oil prices weaker and trading around $27.50 a barrel. There are reports that Russia and Saudi Arabia are close to a deal to cut their crude oil production levels, following pressure by President Trump to do so. OPEC officials were scheduled to meet today via a conference call to discuss production cuts, but that meeting has been moved to Thursday. The U.S. dollar index is slightly higher this morning as the bulls have regained power. The 10-year U.S. Treasury note yield is trading around 0.65% Monday morning, up from Friday’s levels. Gold prices are solidly higher.

U.S. economic data due for release Monday includes the employment trends index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,625.00. First resistance is seen at the overnight high of $1,673.00 and then at $1,675.00. First support is seen at $1,650.00 and then at the overnight low of $1,638.20. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bulls and bears are on a level overall near-term technical playing field. 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 $13.00. First resistance is seen at $15.00 and then at $15.20. Next support is seen at the overnight low of $14.355 and then at $14.00. Wyckoff's Market Rating: 5.0.

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.