U.S. banking worries rally gold, silver markets

(Kitco News) - Gold and silver prices are sharply up, with gold hitting a five-week high and silver a three-week high in midday U.S. trading Monday, on safe-haven demand amid a shaky general marketplace. April gold was last up $42.50 at $1,909.90 and May silver was up $1.419 at $21.92.

Trader and investor anxiety is elevated to start the trading week, following a turbulent weekend in the wake of late last week''s collapse of Silicon Valley Bank, the sixteenth largest bank in the U.S. The federal government said it would back all depositors in the failed bank. Other smaller U.S. banks are reported to be in stress due to depositor withdrawals. Government regulators have also taken over Signature Bank, which serves many crypto currency companies.

To show how much this event has shaken the general marketplace, Goldman Sachs is now predicting the Federal Reserve will not raise U.S. interest rates at its FOMC meeting next week. Said one market analyst in a Wall Street Journal story today: “When the Fed raises rates so quickly, nine times out of 10, it breaks things. We may see more corporate failures; we may see more regional banks go under." Read a headline on Dow Jones Newswires: “Bank mayhem is now on the Fed''s radar."

Global stock markets were mostly lower overnight, while U.S. stock indexes are higher at midday. U.S. Treasury prices are also solidly up (yields down) on flight-to-quality buying. Meantime, Bitcoin prices are sharply up.

Of course, the fear in the marketplace is a contagion effect and crisis of confidence among the investing public and the general public. The next two days will be critical in gauging the stress of the investing and general public.

U.S. President Biden made a television appearance in an attempt to calm very jittery stock and financial markets. However, at the same time Biden spoke the U.S. Treasury bond and note futures markets'' prices were soaring higher on flight-to-quality buying of U.S. government det. During times of very keen trader anxiety, the U.S. Treasury markets are considered to be the supreme safe-haven sanctuary for many traders and investors. Gold prices are also seeing strong safe-haven demand and are at a five-week high, above $1900 an ounce. Meantime, crude oil prices are tanking and hit a three-month low on worries the U.S. financial crisis will crimp global economic growth. The U.S. dollar index has also sold off sharply the past two trading sessions.

Over the next couple days the most important market for traders of all markets to watch is the U.S. Treasury market. An old adage in the marketplace says that bond traders are the smartest guys/gals in the room. The key 10-year U.S. T-Note yield is presently fetching 3.504%, which is well down from levels that just recently pushed above 4.0%. If U.S. Treasury prices continue to rise sharply (yields fall sharply), such will be an indication that stresses in the U.S. financial system are rising. Look for the gold, silver and other market traders to take their cues from what''s going on in the U.S. Treasury markets over the next few days.

The key outside markets today see the U.S. dollar index sharply lower after hitting a three-month high last week. Nymex crude oil futures prices are lower and trading around $76.00 a barrel.

Technically, April gold futures prices hit a five-week high today. Safe-haven demand was featured. Bulls have gained the firm overall near-term technical advantage. Bulls'' next upside price objective is to produce a close above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at today''s high of $1,918.30 and then at $1,932.40. First support is seen at $1,900.00 and then at today''s low of $1,875.70. Wyckoff's Market Rating: 7.0

May silver futures prices hit a three-week high today. The silver bulls have gained the slight overall near-term technical advantage. A five-week-old downtrend on the daily bar chart has been soundly negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at the March low of $19.945. First resistance is seen at $20.25 and then at $22.50. Next support is seen at $21.395 and then at $21.00. Wyckoff's Market Rating: 5.5.

May N.Y. copper closed up 220 points at 405.30 cents today. Prices closed nearer the session high and hit a nine-week low early on. Prices scored a bullish outside day up today. The copper bulls have the slight overall near-term technical advantage but prices are in a seven-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 423.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 385.00 cents. First resistance is seen at last week''s high of 409.50 cents and then at 415.00 cents. First support is seen at 400.00 cents and then at today''s low of 392.15 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com