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Gold prices recover overnight losses as crude oil craters

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(Kitco News) - Gold and silver futures prices are trading modestly up in early U.S. trading Monday. The feature in overnight trading was a very sharp drop of around 40% in crude oil futures prices. Nymex crude oil hit a 21-year low of $11.04 a barrel. Just two months ago Nymex crude prices were above $60.00. North American storage facilities are full and there is no place to put new production, amid the huge drop in gasoline demand that has resulted in prices at the U.S. pump going for less than $1.00 a gallon at some locations. For the precious metals the slumping oil market is a mixed bag. It’s bullish from the sense of making for safe-haven demand amid a very anxious marketplace with crude prices tanking. However, it’s bearish from the sense of crude oil being the leader of the raw commodity sector and its price being in a free fall at present. June gold futures were last up $4.70 an ounce at $1,703.30. May Comex silver prices were last up $0.115 at $15.415 an ounce.

Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. This is a busy week for U.S. corporate earnings, which are very likely to remind traders and investors of debilitating effects of the Covid-19 pandemic.

In the U.S., more and more citizens, many of whom are out of work and running out of money, are demanding that governments reopen businesses.

China’s central bank on Monday again cut its key lending rate by 20 basis points, to 3.85%, in a further effort to resuscitate its crippled economy.

In other overnight news, the German Bundesbank said Germany, the strongest economy in the European Union, is facing a severe economic recession from which it is not likely to recover any time soon. The German central bank said the reason for the slow recovery is that that German government is likely to keep social distancing restrictions on its citizens until a vaccine is found for Covid-19. More economists are saying the expected economic recovery in North America will also be slower than the optimistic forecasts that were initially reckoned by many.

The other important outside markets today see the U.S. dollar index slightly higher. The 10-year U.S. Treasury note yield is trading around 0.632% this morning—down from levels seen late last week and a sign of higher anxiety in the marketplace at present.

U.S. economic reports due for release Monday include the Chicago Fed national activity index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage amid price uptrends in place on the daily, weekly and monthly charts. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,650.00. First resistance is seen at $1,708.00 and then at $1,725.00. First support is seen at the overnight low of $1,685.00 and then at $1,675.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bulls still have the overall near-term technical advantage but a price uptrend on the daily bar chart is in jeopardy. Bulls need to step up and show fresh power soon to keep the uptrend alive. Silver bulls' next upside price objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at Friday’s high of $15.80 and then at $16.00. Next support is seen at last week’s low of $15.195 and then at $15.00. Wyckoff's Market Rating: 6.0.

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.