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Gold hits 7.5-year high and then backs off on profit taking

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(Kitco News) - Gold prices are trading modestly down in midday U.S. trading Tuesday, on some mild profit taking in the futures market after prices spiked to a 7.5-year high of $1,742.60 an ounce in overnight trading, basis June Comex futures. Silver prices pushed solidly higher and hit a three-week high of $15.93 overnight, basis May Comex futures, and are still holding decent gains at midday. The precious metals are boosted early this week on ideas the coronavirus outbreak may be de-escalating. June gold futures were last down $3.40 an ounce at $1,690.50. May Comex silver prices were last up $0.366 at $15.535 an ounce.

The safe-haven metals bulls appeared to have found their sweet spot early this week, as the Covid-19 situation has moved from panic to stabilization, which is encouraging buyers to step back into many markets, including the metals. However, the matter is still dire and the eventual outcome still uncertain enough to prompt safe-haven demand for gold and silver. It could also be that metals traders are looking over the horizon and anticipating problematic price inflation, what with all the money being pumped into the financial system by the major central banks of the world. Economics 101 professors have been teaching for decades that when central banks pump lots of money into the financial system, the specter of increasing inflation is very likely.

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are higher in midday New York trading. So far this week the global marketplace is more upbeat, as it appears the coronavirus outbreak that has crippled the global economy is de-escalating in Europe and the U.S. Some models are predicting infections in the U.S. and U.K. will peak in a week. The situation is by no means a good one at present but may be considered by traders and investors to not be as bad as some had been expecting. Also, health officials are stressing the Covid-19 outbreak could again escalate. British Prime Minister Boris Johnson has the illness and has been moved to an intensive care unit.

Japan today announced an economic stimulus package totaling $1 trillion, to combat the economic damage inflicted by the coronavirus.

The well-known big hedge fund manager Bill Ackman, who three weeks ago gave an emotional TV interview and said “hell was coming” regarding Covid-19, has now tweeted the situation appears to be getting better.

If the Covid-19 outbreak continues to de-escalate, debate will intensify on when to restart the global economies. One respected Washington, D.C.-based analyst/economist is predicting President Trump will restart the U.S. economy on May 1. Trump has been saying for some time that “the cure cannot be worse than the disease.”

The important outside markets today see Nymex crude oil prices higher and trading around $26.25 a barrel. There are reports Russia and Saudi Arabia are close to a deal to cut their crude oil production levels. OPEC officials will meet via a conference call on Thursday to discuss production cuts. The U.S. dollar index is solidly lower today on a corrective pullback from recent good gains. The 10-year U.S. Treasury note yield is trading around 0.77% Tuesday morning, well up from recent levels and also suggesting less anxiety in the marketplace.

Live 24 hours gold chart [Kitco Inc.]

Technically, June bulls have the solid overall near-term technical advantage. More upside is likely in the near term. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at today’s high of $1,742.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,625.00. First resistance is seen at the March high of $1,707.80 and then at $1,725.00. First support is seen at today’s low of $1,683.50 and then at $1,665.00. Wyckoff's Market Rating: 8.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bulls have the overall near-term technical advantage. Prices are now in an uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at today’s high of $15.93 and then at $16.00. Next support is seen at today’s low of $15.27 and then at $15.00. Wyckoff's Market Rating: 6.0.

May N.Y. copper closed up 650 points at 228.25 cents today. Prices closed nearer the session high today and hit a three-week high on more short covering. The copper bulls and bears are now on a level overall near-term technical playing field. A price downtrend has been negated on the daily chart and now an uptrend is beginning. 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 215.00 cents. First resistance is seen at today’s high of 231.75 cents and then at 235.00 cents. First support is seen at 225.00 and then at today’s low of 221.85 cents. 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.