Gold prices are trading moderately higher in midday U.S. dealings Tuesday. It appears a safe-haven bid has returned to the precious metals amid changing marketplace notions regarding the pace of economic healing after the Covid-19 pandemic has subsided. June gold futures were last up $7.50 an ounce at $1,705.50. July Comex silver prices were last up $0.025 at $15.715 an ounce.
Global stock markets were narrowly mixed in overnight trading. U.S. stock indexes are mixed in midday action in New York. Traders and investors are assessing the markets ramifications of a very possible “second wave” of the Covid-19 pandemic as major global economies start to reopen their businesses and transportation infrastructure. There is growing sentiment that economic recoveries will be slower than initially expected and which had been factored into current market prices, including the solid rallies in many global stock indexes. If marketplace notions continue to shift to slower economic recoveries it’s likely that many markets (especially the stock markets) will have to do some serious re-pricing—to the downside.
The Trump administration’s chief pandemic health official, Dr. Anthony Fauci, testified before the U.S. Senate today and warned of the high potential for infections to rise if the U.S. economy begins to reopen too early. Many states are starting to reopen more of their businesses. Government leaders have to walk a tightrope of balancing a likely increase of infections upon reopening businesses versus continued economic damage if they don’t, and that itself will take a significant human health toll. There is no single, correct solution to the matter. It’s a no-win situation for government leaders making those decisions.
The U.S. Federal Reserve late Monday announced it will begin buying corporate bond exchange traded funds (ETFs) for the first time ever, in a further effort to grease the skids of the U.S. financial system. It’s quite extraordinary to see the range of expectations of economists regarding the Covid-19-induced monetary policy stimuli from the major central banks and the future economic impact of such. Some economists forecast price inflation, some call for price deflation and others call for price “stagflation,” or higher inflation with little to no economic growth. Two markets to watch closely that will very likely provide a clue on which scenario will play out are crude oil and gold. If those markets push solidly higher on a sustained basis then inflation would be most likely. If they grind sideways or lower, deflation would most likely to be the case for an extended period of time. One should hope that inflation is the outcome, not because it is such a good thing, but because extended price deflation is a very bad thing for most markets. What do you think? Drop me an email at [email protected]. I always enjoy hearing from my valued readers.
The important outside markets today see Nymex futures solidly higher today and trading around $25.75 a barrel. The U.S. dollar index is lower today. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.
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 $1,716.70 and then at $1725.00. First support is seen at this week’s low of $1,697.60 and then at last week’s low of $1,683.00. 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 170 points at 236.30 cents today. Prices closed nearer the session low today. The copper bulls have the 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 240.00 cents and then at the May high of 243.00 cents. First support is seen at 235.00 cents and then at 232.00 cents