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Price gains in gold, silver amid bank crisis contagion fears

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(Kitco News) - Gold and silver prices are sharply up in early U.S. trading Wednesday, with both metals scoring five-week highs, on keen safe-haven demand. Fears of a global banking/financial crisis are growing at mid-week. April gold was last up $19.90 at $1,930.40 and May silver was up $0.285 at $22.34.

Global stock markets were mixed overnight, with Asian shares mostly up and European shares down. European banking stocks are taking a hit today, led by Credit Suisse and worries about its financial health. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Risk aversion is again elevated at mid-week as the banking turmoil that started in the U.S. is spreading in Europe. Falling U.S. Treasury yields and a stronger U.S. dollar index are indicative of traders and investors who are stressed and wanting to hold those safe-haven assets. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.517%.

The European Central Bank meets Thursday and was expected to raise its main interest rate by 50 basis points. However, the shaky banking sector in the Euro zone at present may at the last minute alter the ECB’s plans. The Federal Reserve’s FOMC meets next week and there is a hot debate in the marketplace regarding whether the Fed will raise its main interest rate by 25 basis points, or stand pat amid the U.S. banking crisis.

The data point of a very busy U.S. economic report day Wednesday is the producer price index report for February. PPI is seen coming in up 0.3% from January, following a 0.7% rise in January from the December report. Tuesday’s U.S. consumer price index report came out right in line with market expectations.

Natixis raises its 2023 gold price average but doesn't see $1,900 holding as banking crisis fears start to ease

In overnight news, China’s economy rebounded the first two months of the year, as the world’s second-largest economy moved away from Covid restrictions of the past three years. Retail sales in January and February were up 3.5% from the same period a year ago. Industrial production was up 2.4% in the same periods. China’s exports were down 6.8% in the same periods.

The key outside markets today see the U.S. dollar index sharply higher. Nymex crude oil futures prices are down and trading around $70.00 a barrel.  

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, retail sales, the producer price index, the NAHB housing market index, manufacturing and trade inventories, the weekly DOE liquid energy stocks report and Treasury international capital data.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,932.40 and then at $1,950.00. First support is seen at $1,900.00 and then at today’s low of $1,889.50. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have gained the overall near-term technical advantage. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.50 and then at $22.80. Next support is seen at $22.00 and then at $21.50. 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.