(Kitco News) – Gold and silver prices are solidly up in early U.S. futures trading Monday, but off of their overnight highs, as the coronavirus pandemic has traders and investors worldwide unnerved and seeking out safe-haven metals. The negative effects of the coronavirus outbreak on the global economy appear to be increasing. April gold futures hit a new contract high overnight and were last up $30.10 an ounce at $1,678.80. March Comex silver prices were last up $0.155 at $18.685 an ounce.
Markets worldwide are getting rocked by a marked increase over the weekend in trader and investor fears amid the still-growing coronavirus outbreak. Gold is up around $40 an ounce and at a seven-year high, U.S. Treasuries are rallying sharply, the U.S. dollar index is up, crude oil prices are sharply down and much of the rest of the raw commodity sector is feeling selling pressure. Asian and European shares were down overnight. U.S. stock indexes are pointed sharply lower openings when the New York day session begins, with the DJIA down over 700 points.
While the human toll from the coronavirus (covid-19) is growing, the likely economic toll also is expanding. What is gripping markets is the keen uncertainty of how this situation will eventually play out. There is no consensus at all regarding the outcome.
China recorded the total number of afflicted at over 77,000 and over 2,350 dead. The illness is also spreading in South Korea. Northern Italy has some towns quarantined after the covid-19 illness was discovered spreading in that region, including three deaths.
Manufacturing indexes from the major world economies are showing the negative effects of the covid-19 outbreak. U.S. companies are also mentioning the illness as impacting their bottom lines when earnings reports are released. The global marketplace has quickly realized early this year the keen importance of China’s economy in the world supply chain, which has been significantly disrupted.
The key outside markets today see crude oil prices sharply lower and trading around $51.40 a barrel. Meantime, the U.S. dollar index is higher and not far below last week’s nearly three-year high.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
Technically, the gold bulls have the strong overall near-term technical advantage to suggest still more upside in the near term. A 3.5-month-old price uptrend is in place on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,620.00. First resistance is seen at the overnight high of $1,691.70 and then at $1,700.00. First support is seen at $1,670.00 and then at $1,660.00. Wyckoff’s Market Rating: 9.0.
March silver futures bulls have the firm overall near-term technical advantage and hit a six-week high overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the January high of $18.895 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $18.895 and then at $19.00. Next support is seen at the overnight low of $18.555 and then at $18.50. Wyckoff’s Market Rating: 7.0.
By Jim Wyckoff
For Kitco News