Gold, silver bulls have solid power to suggest still more upside

(Kitco News) – Gold and silver prices moderately up in early U.S. futures trading Thursday, with spot gold hitting a seven-year high in some world markets. Featured this week in the precious metals is a marked uptick in safe-haven demand as the negative economic consequences from the coronavirus outbreak appear to be increasing. April gold futures hit a new contract high overnight and were last up $7.70 an ounce at $1,619.50. March Comex silver prices were last up $0.014 at $18.325 an ounce.

Asian and European shares were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, on some profit taking after the Nasdaq and S&P 500 indexes hit record highs Wednesday.

The coronavirus outbreak remains on or close to the front burner of the global marketplace, and today the concerns seem a bit greater. China’s central bank cut its one-year loan prime rate to 4.05% from 4.15% and the five-year loan rate to 4.75% from 4.80%. The move was not surprising and is an effort to keep the world’s second-largest economy afloat as the negative impact of the covid-19 outbreak is growing. China’s manufacturers are running out of needed materials and some have shut their doors. This situation is impacting global businesses and underscores the significance of the world supply chain that has many links in China.

There is now talk that with supply shortages of some commodities in China, those commodity prices could actually rise on the world market due to hoarding and China’s manufacturers scrambling to procure those commodities. Such talk is ironic given the coronavirus has worked to crimp global economic growth, including pushing several raw commodity prices lower on expectations for reduced demand for them.

The Federal Reserve said in its FOMC meeting minutes released Wednesday afternoon that it is closely monitoring the economic impact of the coronavirus outbreak.

While it’s been reported the rate of spread of the coronavirus (now called covid-19) has slowed significantly recently, other health experts say there is little sign of the virus easing due to its high contagion level. Reports said the Hubei province in China had around 350 new confirmed cases Wednesday, down from nearly 1,700 on Tuesday. Two covid-19 infected passengers of the cruise ship quarantined in Japan have died, with two Japanese government officials reported to have been infected.

The key outside markets today see crude oil prices near steady and trading around $53.25 a barrel. Meantime, the U.S. dollar index is up and hit another multi-month high in early U.S. trading. The greenback bulls have benefited greatly from safe-haven demand amid the heightened global uncertainty.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators, and the weekly DOE liquid energy stocks report.

Technically, the gold bulls have the solid overall near-term technical advantage and have gained power this week by restarting a three-month-old price uptrend on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,650.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,581.80. First resistance is seen at the overnight high of $1,621.60 and then at $1,625.00. First support is seen at the overnight low of $1,606.60 and then at $1,600.00. Wyckoff’s Market Rating: 8.5

March silver futures bulls have the overall near-term technical advantage with this week’s strong gains. 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 this week’s low of $17.67. First resistance is seen at this week’s high of $18.45 and then at $18.50. Next support is seen at Wednesday’s low of $18.135 and then at $18.00. Wyckoff’s Market Rating: 6.0.

By Jim Wyckoff
For Kitco News


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