Gold, silver plummet as raw commodity sector pounded on Covid fears

Gold and silver prices are sharply down and hit two-month lows in midday U.S. trading Monday. Gold dropped below the psychologically important $1,900 level. The entire raw commodity sector was hit hard today by concerns regarding demand as Covid cases in China, the world’s second-largest economy, are spreading rapidly. Serious near-term technical damage was inflicted in gold and silver today, which has emboldened the chart-based bears. June gold futures were last down $38.20 at $1,896.10 and May Comex silver was last down $0.579 at $23.69 an ounce.

Global stock markets were mostly lower overnight, led by the biggest drop in Chinese shares in two years. U.S. stock indexes are pointed solidly lower at midday. There are growing worries about the economic toll of China’s strict zero Covid policy, as lockdowns spread to Beijing. The Chinese yuan dropped to its lowest level against the U.S. dollar since late 2020. The Covid flareup that shut down much of Shanghai appeared to worsen over the weekend. China ordered mandatory tests in a district of Beijing and shut down some areas of the capital of more than 20 million people. This situation is expected to further disrupt already strained global supply chains and likely drive already problematic inflation still higher.

The Russia-Ukraine war that shows no signs of de-escalating continues to sap trader and investor risk appetite. Metals traders on this day decided to focus more on the bearish implications of less demand for gold and silver coming out of China, and less of the bullish implications of keener risk aversion in the marketplace.

Here's what latest gold price pattern tells investors about the metal's next move

The key outside markets see Nymex crude oil futures prices sharply lower today and trading around $96.50 a barrel. The U.S. dollar index is solidly higher and hit a two-year high early today. The yield on the 10-year U.S. Treasury note is presently fetching around 2.776%.

Technically, June gold futures prices hit a two-month low today and a price downtrend has been started. Bulls have lost their overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,915.00 and then at $1,925.00. First support is seen at today’s low of $1,891.80 and then at $1,883.00. Wyckoff's Market Rating: 5.0

May silver futures prices hit a nine-week low today and a price downtrend is in place now. The silver bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $24.00 and then at today’s high of $24.24. Next support is seen at today’s low of $23.42 and then at $23.00. Wyckoff's Market Rating: 4.0.

May N.Y. copper closed down 1,620 points at 441.90 cents today. Prices closed near the session low today and hit a 2.5-month low. The copper bears have gained the overall near-term technical advantage. A price downtrend is now in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 470.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.80 cents. First resistance is seen at 450.00 cents and then at 455.00 cents. First support is seen at today’s low of 440.65 cents and then at 435.00 cents. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

 

Tim Moseley