(Kitco News) – Gold prices are trading modestly up in early U.S. futures trading Friday, as U.S. stock index futures are sharply higher to limit up before the New York day session begins. Gold futures prices hit a two-month low overnight. Markets overnight were buoyed in part on hopes the U.S. government will announce on Friday some economic stimulus measures to counteract the negative impacts of the coronavirus scare that is gripping the world. Silver prices are seeing continued strong selling pressure and hit an eight-month low overnight. April gold futures were last up $5.40 an ounce at $1,595.00. May Comex silver prices were last down $0.175 at $15.83 an ounce.
Most global stock markets also rebounded Friday, following Thursday rout that saw the biggest daily losses in the Dow Jones Industrial Average since the 1987 stock market crash. U.S. stock indexes are still firmly in bearish territory—down more than 20% from their record highs scored in February.
Here’s the key question on veteran traders’ and investors’ minds: At what point will general capitulation occur in markets that have been pounded lower? That means traders/investors already under pressure to get rid of their rapidly depreciating assets just throw up their hands and succumb to the financial pressures on them, and sell—suggesting selling has finally become exhausted and market bottoms are in place. It can be argued that Thursday’s price action showed some signs of capitulation. There was “blood on the Street.” Safe-haven gold and U.S. Treasury bond and note futures prices were hammered Thursday as traders sold what assets they could after U.S. stock index futures trading was halted in morning dealings after prices locked down their daily trading limits. Said one trader of Thursday’s price action: “There was nowhere to hide.”
Psychologically, the cancellation Thursday of most major U.S. sporting events for at least the next several weeks dealt the general trading/investing public a surprising blow that arguably won’t be topped during this crisis. If the U.S. stock indexes post good closing gains on this Friday the 13th, (right now that’s a big if), then there will be more than a few long-time market watchers, including this one, who will think this major global market shock has hit its climax, from a markets perspective. If so, markets next week would begin to stabilize and stock indexes likely will have put in their market-crisis bottoms.
Major central banks of the world on Friday continued to take actions to thwart the economic damage caused by the coronavirus outbreak that continues to spread, including in the U.S. Norway’s central bank lowered interest rates while the European Central Bank Friday worked to assuage European traders disappointed by the ECB’s stimulatory actions announced Thursday. The ECB said Friday that more actions by the bank are possible in the near term. Meantime, China’s central bank lowered its reserve requirement ratio for its banks, to free up more cash for consumer loans. These moves follow Thursday’s massive injection of short-term liquidity into the U.S. financial system by the Federal Reserve around midday.
The benchmark 10-year U.S. Treasury note sees its yield around 0.9% Friday, which is well up from Thursday’s reading and also suggestive of a stabilizing global marketplace. The U.S. dollar index is trading a bit weaker in early U.S. trading, but it appears the greenback is finally getting a safe-haven bid as marketplace anxiety levels rise. The Euro currency is slumping this week, as well as the “commodity currencies”—the Canadian dollar and the Australian dollar. The crypto currency market has been hammered this week, as Bitcoin prices late this week hit a nearly one-year low.
Nymex crude oil prices are solidly up Friday morning and trading around $33.00 a barrel.
U.S. economic data due for release Friday includes import and export prices and the University of Michigan consumer sentiment survey
Technically, the gold bulls have lost their overall near-term technical advantage as a 3.5-month-old price uptrend on the daily chart was soundly negated Thursday. 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 the overnight low of $1,551.00. First resistance is seen at today’s high of $1,594.20 and then at $1,600.00. First support is seen at $1,575.00 and then at $1,551.00. Wyckoff’s Market Rating: 5.0
March silver futures bears have the firm overall near-term technical advantage amid a steep price downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at today’s high of $15.89 and then at $16.00. Next support is seen at today’s low of $15.30 and then at $15.00. Wyckoff’s Market Rating: 3.0.
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