Gold, silver prices see safe-haven demand on global economic worries

(Kitco News) – Gold and silver prices are moderately up and hit multi-week highs in early U.S. futures trading Wednesday, on more safe-haven demand as the economic ramifications from the coronavirus outbreak remain very uncertain. April gold futures were last up $7.30 an ounce at $1,611.00. March Comex silver prices were last up $0.185 at $18.34 an ounce.

Asian and European shares were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Risk aversion has receded a bit Wednesday. It appears the spread of the coronavirus illness (now officially called covid 19) to humans has slowed and that’s somewhat encouraging to the marketplace. However, the economic consequences of the outbreak are still playing out. What traders, investors, analysts and other market watchers are discovering is that the global supply chain sees many of its links in China, and with much of China’s population still in quarantine, many global businesses—especially manufacturers–are suffering and may continue to do so for a while. There are anecdotal reports coming out of China that paint a dire picture of the situation there, regarding local commerce. The uncertainty regarding when the global supply chain will return to normal is likely to continue to squelch trader and investor risk appetite for at least the near term. That’s bullish for the precious metals markets.

The key outside markets today see crude oil prices higher and trading around $52.75 a barrel. Meantime, the U.S. dollar index is slightly up and hit another multi-month high in early U.S. trading. The greenback bulls have flexed their muscles lately, partly on safe-haven demand amid the heightened global uncertainty. U.S. Treasuries are also benefiting from safe-haven buying interest this week.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Goldman Sachs and Johnson Redbook weekly retail sales reports, the consumer price index, the producer price index, new residential construction, and FOMC minutes. Several Federal Reserve officials also are slated to give speeches today.

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 the January high of $1,619.60. 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 $1,614.40 and then at $1,619.60. First support is seen at the overnight low of $1,602.40 and then at $1,600.00. Wyckoff’s Market Rating: 8.0

March silver futures bulls have gained the overall near-term technical advantage with this week’s strong gains. A six-week-old downtrend on the daily bar chart has been soundly negated. 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 $18.50 and then at $18.75. Next support is seen at the overnight low of $18.135 and then at $18.00. Wyckoff’s Market Rating: 6.0.

By Jim Wyckoff
For Kitco News

Contact jwyckoff@kitco.com
www.kitco.com

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