Gold prices gain as global stock markets continue to wobble
London (Mar 11) Gold prices are moderately higher in early U.S. futures trading Wednesday. The safe-haven metal remains in good demand among traders and investors as the coronavirus scare continues to escalate and governments ramp up their efforts to battle the spread of the illness. April gold futures were last up $7.30 an ounce at $1,667.80. May Comex silver prices were last up $0.04 at $16.995 an ounce.
Global stock markets are mostly lower Wednesday and U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. The higher volatility, yo-yo daily trading action recently favors the bearish camp. The coronavirus outbreak continues to spread, including in the U.S., where major conventions are being cancelled, some colleges are telling students to go home and U.S. airlines are reducing flights substantially.
The Bank of England cut its key interest rate by 0.5% overnight and the U.K. government said it is set to implement economic stimulus measures. The marketplace was a bit upset Tuesday when the Trump administration failed to announce any U.S. economic stimulus measures after President Trump hinted such might occur.
The general public and traders and investors’ perceptions of the human and economic tolls of the Covid-19 near-pandemic are darkening by the day. Traders hate uncertainty, and the marketplace still does not have any grasp of how the coronavirus situation will ultimately play out from a markets perspective.
The Saudi Arabia-Russia oil-price war and its global energy and economic ramifications remain on traders’ minds, and would normally be on the front burner of the marketplace if not for the coronavirus scare. Traders are wondering if the two major global oil producers might soon meet to reconcile their differences, as it appears both countries are “cutting off their nose to spite their face.”
The benchmark 10-year U.S. Treasury note sees its yield around 0.725% Wednesday, which is down from Tuesday’s reading. On Monday the U.S. 10-year note hit a record low yield of 0.387%.
The U.S. dollar index is trading weaker in early U.S. trading following sharp gains Tuesday. Nymex crude oil prices are down and trading around $33.25 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the consumer price index, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement.
Technically, the gold bulls have the solid overall near-term technical advantage amid a 3.5-month-old price uptrend on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,704.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,625.00. First resistance is seen at $1,675.00 and then at Tuesday’s high of $1,681.30.
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