(Kitco News) - Strong safe-haven demand for gold sent the precious metal soaring to a 12-month high above $1,260.00 Thursday. Another big sell off in world stock markets sent investors and traders scrambling into the gold market. There are growing concerns about the collective health of the major world economies. Gold prices have risen around 15% the past six weeks. April Comex gold was last up $54.00 at $1,248.60 an ounce. March Comex silver was last up $0.523 at $15.81 an ounce.
There was keen worldwide investor and trader risk aversion Thursday as most world stock markets suffered sharp losses. Falling crude oil prices, worries about the European financial system and weak overall world economic growth prospects are combining to spook the world marketplace. The Stoxx Europe 600 index was down nearly 4% Thursday. Hong Kong’s Hang Seng index was also down around 4% on the day. China and Japan markets were closed Thursday for holidays. The Japanese yen has soared against the U.S. dollar on safe-haven demand from market participants in the Asian region.
U.S. stock indexes were sharply lower in afternoon trading Thursday.
There is once again rising concern about European countries’ sovereign debt, as bond yields in several EU countries have risen sharply in recent weeks. The outlier is Germany, whose bonds are considered to be high quality and safe-haven. German bond yields are presently at record lows and in negative territory.
Nymex crude oil prices were trading lower and just below $27.00 a barrel Thursday afternoon. This week’s selling pressure in Nymex crude has pushed prices to near a 12-year low.
Market watchers closely scrutinized Fed Chair Janet Yellen’s testimony on the U.S. economy before a U.S. Senate committee Thursday. Yellen mentioned that negative interest rates in the U.S. cannot be ruled out, which further fueled the gold market bulls.
Her remarks to a U.S. House committee Wednesday were at least partly blamed on selling pressure in world stock markets overnight. Now, many are doubting the Fed will be able to raise U.S. interest rates this year, as had been its intention until the recent turmoil in world markets.
In overnight news, Sweden’s central bank cut its main interest rate even farther, to minus 0.5% from minus 0.35%. The move was not expected and added some anxiety to the world marketplace.
The World Gold Council has issued a report saying world gold demand was flat in 2015, but less supply likely in 2016 will be a positive for the precious metal.
U.S. economic data due for release Thursday was light and included the weekly jobless claims report, which came in better than expected but had little impact on the markets.
Technically, April gold futures prices closed nearer the session high and scored a fresh 12-month high today. Prices are in an accelerating seven-week-old uptrend on the daily bar chart. Bulls have the solid near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at today’s high of $1,263.90 and then at $1,275.00. First support is seen at $1,240.00 and then at $1,225.00. Wyckoff’s Market Rating: 8.0
March silver futures prices closed nearer the session high today and hit another 3.5-month high today. The silver market bulls have the firm overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $16.41 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 $16.00 and then at $16.25. Next support is seen at $15.48 and then at today’s low of $15.285. Wyckoff's Market Rating: 7.0.
March N.Y. copper closed down 190 points at 200.80 cents today. Prices closed nearer the session low and hit another two-week low today. The copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 213.80 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 193.55 cents. First resistance is seen at today’s high of 203.05 cents and then at 204.30 cents. First support is seen at today’s low of 199.85 cents and then at 197.00 cents. Wyckoff's Market Rating: 1.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
