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Safe-haven demand boosts gold, silver, as crude oil crashes

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(Kitco News) - Gold and silver futures prices are trading solidly up in midday U.S. trading Monday. The feature in trading today is an extremely sharp drop of over 50% in crude oil futures prices—in just one day. Nymex crude oil futures hit an all-time low of $8.79 a barrel today. 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—especially on a near-term basis. 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. It would be especially bearish for metals if oil prices remained at such low levels for more than a few weeks, which appears unlikely, given that June Nymex futures (the next contract out from May futures) are trading at $22.75 a barrel. June gold futures were last up $12.50 an ounce at $1,711.20. May Comex silver prices were last up $0.325 at $15.61 an ounce.

Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are mixed at midday but well off their session lows. 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 news Monday, 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 near steady. 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.

Live 24 hours gold chart [Kitco Inc.]

Technically, June gold futures bulls have the solid overall near-term technical advantage and are keeping alive a price uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,800.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,675.00. First resistance is seen at $1725.00 and then at last Friday’s high of $1,738.80. First support is seen at $1,700.00 and then at today’s low of $1,685.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bulls have the overall near-term technical advantage. Bulls are keeping alive a four-week-old uptrend on the daily bar chart. 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 $16.00 and then at the April high of $16.30. Next support is seen at last week’s low of $15.195 and then at $15.00. Wyckoff's Market Rating: 6.0.

May N.Y. copper closed down 225 points at 232.20 cents today. Prices closed nearer the session low today on a corrective pullback from recent gains. The copper bulls have the overall near-term technical advantage. A four-week-old price uptrend is in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 250.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 220.00 cents. First resistance is seen at last week’s high of 235.80 cents and then at 238.00 cents. First support is seen at 230.00 cents and then at last week’s low of 226.35 cents. 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.