Steep price declines in gold, silver amid China Covid worries
(Kitco News) - Gold and silver prices are sharply down in early U.S. trading Monday, with gold hitting a nearly four-week low and silver a nine-week low. There are mounting concerns regarding demand for raw commodities as Covid cases in China, the world’s second-largest economy, are spreading rapidly throughout the country. June gold futures were last down $35.90 at $1,898.00 and May Comex silver was last down $0.729 at $23.53 an ounce.
Global stock markets were mostly lower overnight, led by the biggest drop in Chinese shares in two years. U.S. stock indexes are pointed toward lower openings when the New York day session begins. There are growing worries about the economic toll of China’s strict zero Covid policy, as lockdowns spread to Beijing. The Chinese yuan dropped to its lowest level against the U.S. dollar since late 2020. The Covid flareup that shut down much of Shanghai appeared to worsen over the weekend. China ordered mandatory tests in a district of Beijing and shut down some areas of the capital of more than 20 million people. This situation is expected to further disrupt already strained global supply chains and likely drive already problematic inflation still higher.
The Russia-Ukraine war that shows no signs of de-escalating continues to sap trader and investor risk appetite.
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The key outside markets see Nymex crude oil futures prices sharply lower today and trading around $97.75 a barrel. The U.S. dollar index is higher and hit a two-year high early today. The yield on the 10-year U.S. Treasury note is presently fetching 2.833%.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
Technically, the June gold futures bulls have the slight overall near-term technical advantage but are fading fast and need to show fresh power soon to keep it. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,893.20. First resistance is seen at $1,915.00 and then at $1,925.00. First support is seen at the March low of $1,893.20 and then at $1,875.00. Wyckoff's Market Rating: 5.5
May silver futures bears have gained the the overall near-term technical advantage amid the recent steep price downdraft. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the overnight high of $24.00 and then at the overnight high of $24.24. Next support is seen at today’s low of $23.42 and then at $23.00. Wyckoff's Market Rating: 4.0.