Gold, silver prices lower as panicked markets quickly return

(Kitco News) - Gold and silver prices are trading moderately down in early U.S. trading Wednesday, amid a frightened marketplace as global commerce shuts down and serious world economic recession looms. The safe-haven metals cannot get a bid in early trading as spooked buyers in most markets step back amid the extreme uncertainty of the situation. April gold futures were last down $9.40 an ounce at $1,516.50. May Comex silver prices were last down $0.125 at $12.37 an ounce.

Global stock markets were solidly down in overnight trading and U.S. stock index futures are presently pointed toward limit-down openings when the New York day session begins. Look for another volatile day in many markets, including the precious metals.

A more-than-$1 trillion U.S. aid package for U.S. consumers and businesses is so far not assuaging trader and investor confidence at mid-week. Instead, they are considering the consequences of a North American way of life that has been turned upside down. Most retail businesses, schools and universities are closed and streets are seeing much less traffic. Major corporations such as Boeing and U.S. airlines are teetering on bankruptcy. The U.S. Treasury and commercial paper markets are not functioning well despite massive infusions of funds from the Federal Reserve. U.S. Treasury Secretary Mnuchin on Tuesday warned the U.S. unemployment rate could reach 20%. Considering all of the above and knowing that markets have historically factored into their prices major events’ repercussions before they ever fully play out, veteran market watchers are wondering when the worst of this crisis will come to pass, from a markets perspective. At mid-week it appears the markets are saying, “not yet.”

There was some hope late Tuesday that the sharp rise in the 10-year U.S. Treasury note yield back above 1.0% was indicating the government bond market was reckoning the worst of the coronavirus market damage has passed and that the panic in the marketplace had receded. However, looking at the sharply lower U.S. Treasury bond and Treasury note futures prices overnight it appears the rising bond yields are more a case of serious dislocations in that market as opposed to an easing of trader and investor market fears. Wednesday morning the 10-year Treasury note was yielding 1.13%.

The U.S. dollar index is higher in early U.S. trading and has this week hit a three-year high. Nymex crude oil futures prices are solidly down and hit a 17-year low of $25.08 a barrel overnight.

Reports said one U.S. hedge fund manager, Malachite, Management LLC, has closed down, citing “extreme, adverse market conditions.” Reports said the firm specialized in trading volatility. Apparently in these trying times at least one firm should not get what one asks for.

The Commodity Futures Trading Commission has relaxed some of its rules for brokerages, to help them deal with the extreme markets moves that are occurring daily.

In another sign of the times, this afternoon’s conclusion of the Federal Reserve’s Open Market Committee meeting (FOMC) is nowhere near the front burner of the marketplace today, when normally it’s one of the market highlights of the month.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, the conclusion of the FOMC meeting and the weekly DOE liquid energy stocks report.

Technically, the gold bears have the firm overall near-term technical advantage amid the recent price pressure. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,575.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,450.90. First resistance is seen at $1,525.00 and then at the overnight high of $1,547.00. First support is seen at $1,500.00 and then at the overnight low of $1,487.90. Wyckoff's Market Rating: 3.0

May silver futures bears have the solid overall near-term technical advantage amid the big price downdraft. Silver bulls' next upside price objective is closing prices above solid technical resistance at $14.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $11.00. First resistance is seen at $13.00 and then at Tuesday’s high of $13.23. Next support is seen at $12.00 and then at Monday’s low of $11.77. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com