Gold prices are higher and silver prices are sharply up after hitting an eight-month low overnight. It appears the gold and silver sellers have now become exhausted, given the strong overnight price rebounds from early sharp losses. This suggests both metals have put in near-term price bottoms. June gold was last up $21.90 at $3,057.00. May silver prices were last up $1.19 at $30.44.
Asian and European stock markets were sharply lower in overnight trading. U.S. stock indexes are again pointed to sharply lower and 14-month-low openings today in New York, although they are well up from overnight lows. Some major global stock indexes, including the S&P 500 and Nasdaq, have already or will today hit bearish territory (down 20% from their 52-week highs).
General marketplace fear remains very high to start the trading week. The U.S. and other major economies are in a very serious stare-down over trade tariffs, which threatens to push the U.S. and/or global economy into recession. President Trump on Sunday said the U.S. is now “taking medicine” to solve its major trade “problem.” The pressure is building in the Trump administration as American citizens’ 401ks and stock portfolios are rapidly deteriorating. Trump’s staunchest supporters are also starting to crack a bit. Senator Ted Cruz, Congressman Mitch McConnell and Elon Musk have all come out and expressed worries about Trump’s trajectory on trade tariffs.
JP Morgan chief Jamie Dimon has warned that tariffs will raise prices and lower economic growth. That would mean the dreaded stagflation would set in.
The volatility index, or VIX, is presently trading above 50 after jumping above 60 overnight. There have been only three other times in the past two decades the VIX has traded above 50: late 2008 and early 2009, during the global financial crisis, and in 2020 at the beginning of the pandemic. Over the past 10 years the VIX has averaged just over 19. It hit a record high of 89 in October of 2008.
The marketplace is presently pricing in five Federal Reserve U.S. interest rate cuts this year, for a total of a 1.25% cut in the Fed funds rate. Traders and investors are also thinking the Fed may even make an emergency rate cut before the next FOMC meeting.
Here is my bias at present: This near-historic stock market sell off will likely come to a climax sometime this week. With that will also likely come many commodity markets scoring near-term price bottoms. This is my bias from a time perspective, not a price perspective. That means many markets are likely to climax this week, but at what price points they do, nobody can come close to predicting. And if I’m wrong and stock indexes don’t put in near-term price bottoms this week, the U.S. and global economies will likely see recessions, or worse.
The key outside markets today see the U.S. dollar index down a bit but well up from last week’s six-month low. Nymex crude oil futures prices are sharply down, hit a four-year low and are trading around $59.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is now below 4% and presently at 3.955%. U.S. Treasuries are seeing flight-to-quality buying amid the spooked marketplace.
U.S. economic data due for release Monday include the employment trends index and consumer credit.
Technically, June gold futures bulls still have the firm overall near-term technical advantage but have faded. However, overnight price action suggests the bears are now exhausted from the recent selling pressure. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $3,201.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,950.00. First resistance is seen at the overnight high of $3,084.40 and then at $3,100.00. First support is seen at Friday’s low of $3,032.70 and then at $3,000.00. Wyckoff’s Market Rating: 7.5.
May silver futures bulls and bears are back on a level overall near-term technical playing field. Overnight price action suggests the bears have become exhausted and that a near-term price bottom is in place. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at the overnight low of $27.545. First resistance is seen at the overnight high of $30.76 and then at $31.00. Next support is seen at $30.00 and then at $29.50. Wyckoff’s Market Rating: 5.0.
Source: Jim Wyckoff Kitco
