(Kitco News) - Gold prices are sharply lower but have traded both sides of unchanged as midday approaches Monday. Gold prices are presently being pressured by weak long liquidation in the futures market, by rising U.S. Treasury yields, a rally in the U.S. dollar index and slumping crude oil prices. Silver prices are up but down from session highs. It does appear silver sellers have become exhausted, given the strong overnight price rebound from early sharp losses. June gold was last down $38.50 at $2,996.70. May silver prices were last up $0.555 at $29.79.
The gold market was higher overnight and in early New York trading, then sold off, only to briefly rebound along with the U.S. stock market on an unfounded rumor the U.S. would pause its tariffs for 90 days. Gold and stocks then sold back off as the White House denied there would be any pause and when President Trump threatened China with more tariffs.
Asian and European stock markets were sharply lower in overnight trading. U.S. stock indexes solidly lower but off the 14-month-lows set in early trading. Some major global stock indexes, including the S&P 500 and Nasdaq, have already or will today hit bearish territory (down 20% from their 52-week highs).
General marketplace fear remains very high to start the trading week. The U.S. and other major economies are in a very serious stare-down over trade tariffs, which threatens to push the U.S. and/or global economy into recession. President Trump on Sunday said the U.S. is now “taking medicine” to solve its major trade “problem.” The pressure is building in the Trump administration as American citizens’ 401ks and stock portfolios are rapidly deteriorating. Trump’s staunchest supporters are also starting to crack a bit. Senator Ted Cruz, Congressman Mitch McConnell and Elon Musk have all come out and expressed worries about Trump’s trajectory on trade tariffs.
JP Morgan chief Jamie Dimon has warned that tariffs will raise prices and lower economic growth. That would mean the dreaded stagflation would set in.
The volatility index, or VIX, on Monday traded above 50 after jumping above 60 overnight. There have been only three other times in the past two decades the VIX has traded above 50: late 2008 and early 2009, during the global financial crisis, and in 2020 at the beginning of the pandemic. Over the past 10 years the VIX has averaged just over 19. It hit a record high of 89 in October of 2008.
The marketplace is presently pricing in five Federal Reserve U.S. interest rate cuts this year, for a total of a 1.25% cut in the Fed funds rate. Traders and investors are also thinking the Fed may even make an emergency rate cut before the next FOMC meeting.
Here is my bias at present: This near-historic stock market sell off will likely come to a climax sometime this week. With that will also likely come many commodity markets scoring near-term price bottoms. This is my bias from a time perspective, not a price perspective. That means many markets are likely to climax this week, but at what price points they do, nobody can come close to predicting. And if I’m wrong and stock indexes don’t put in near-term price bottoms this week, the U.S. and global economies will likely see recessions, or worse.
The key outside markets today see the U.S. dollar index solidly up on a rebound from last week’s six-month low. Nymex crude oil futures prices are down, hit a four-year low and are trading around $60.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is 4.13%.
Technically, June gold futures bulls still have the firm overall near-term technical advantage but have faded. However, overnight price action suggests the bears are now exhausted from the recent selling pressure. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $3,201.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,950.00. First resistance is seen at $3,050.00 and then at the overnight high of $3,084.40. First support is seen at today’s low of $2,985.00 and then at $2,950.00. Wyckoff's Market Rating: 7.0.
May silver futures bulls and bears are back on a level overall near-term technical playing field. Overnight price action suggests the bears have become exhausted and that a near-term price bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at the overnight low of $27.545. First resistance is seen at $30.00 and then at the overnight high of $30.76. Next support is seen at today’s low of $27.545 and then at $20.00. Wyckoff's Market Rating: 5.0.
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