Gold higher as Covid-induced marketplace uncertainty remains keen

(Kitco News) - Gold prices are moderately up in midday U.S. trading Wednesday. There continues some
safe-haven buying in the precious metals amid elevated uncertainty regarding how and for how long the Covid-19 pandemic will ultimately impact the global economy. June gold futures were last up $9.30 an ounce at $1,716.10. July Comex silver prices were last down $0.059 at $15.65 an ounce.

The marketplace was closely watching Federal Reserve Chairman Jerome Powell in a Wednesday morning webcast to an economics group. Powell gave a downbeat assessment of the U.S. economy, including its prospects for a quick recovery after the pandemic subsides. Powell also appeared to shoot down notions that U.S. interest rates could fall into negative territory amid the pandemic-induced damage to the U.S. economy. He said the Fed is not looking at that option. Gold prices dropped from their daily highs on Powell’s rejection of the possibility of negative interest rates. President Trump tweeted Tuesday he would be in favor of such occurring. This matter is of special interest to precious metals traders, as the knock on investing in gold has been that it offers investors no dividend. Interest rates at or below zero would work to eliminate the “opportunity cost” associated with owning precious metals. While negative U.S. interest rates may be off the table, a rate of zero does not seem out of the question, given current economic prospects. The Wall Street Journal today released a poll of economists that is forecasting second-quarter U.S. gross domestic product being down over 30%.

U.S. stock indexes were lower and near their daily lows at midday. A couple of heavy-hitter market players—Stanley Druckenmiller and David Tepper—have come out this week and said U.S. stocks are way overvalued. Global stock markets were mixed in overnight trading. Still, traders and investors at mid-week are staying somewhat upbeat despite increasing concerns about a second wave of Covid-19 infections hitting the world’s major economies that are starting to open back up. The top U.S. health official on Tuesday warned the U.S. Congress about the dangers of reopening the economy too early. Also, the specter of a renewed U.S.-China trade war, or worse, looms in the background after recent harsh rhetoric coming from both sides and directed at the other.

The important outside markets see Nymex crude oil futures lower today and trading around $25.38 a barrel. The U.S. dollar index is higher at midday. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.65%.

Technically, June gold futures bulls have the firm overall near-term technical advantage amid recent choppy trading. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,666.20. First resistance is seen at today’s high of $1,726.50 and then at last week’s high of $1735.50. First support is seen at $1,700.00 and then at this week’s low of $1,692.10. Wyckoff's Market Rating: 7.0

July silver futures bulls have the slight overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the April high of $16.30 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at $16.00 and then at $16.25. Next support is seen at $15.50 and then at $15.25. Wyckoff's Market Rating: 5.5.

July N.Y. copper closed down 115 points at 234.75 cents today. Prices closed near mid-range today. The copper bulls have the slight overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 250.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 221.70 cents. First resistance is seen at Tuesday’s high of 238.65 cents and then at 240.00 cents. First support is seen at this week’s low of 233.05 cents and then at 230.00 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com