Gold sharply up as U.S. stocks plummet in high volatility

Mar 5, 2020 | Gold

Gold prices are sharply higher in midday U.S. futures trading Thursday, on keen safe-haven demand as the U.S. stock market is sharply down on the day. The coronavirus outbreak continues to roil the global marketplace. April gold futures were last up $24.30 an ounce at $1,667.40. May Comex silver prices were last up $0.154 at $17.40 an ounce.

The U.S. stock market euphoria over Democratic U.S. presidential candidate Joe Biden’s solid performance at the “Super Tuesday” primaries quickly faded Thursday as focus again turned to the uncertainty regarding the Covid-19, or coronavirus, outbreak that continues to spread worldwide and especially outside of China. This week, major corporations have suspended air travel for their employees and cancelled some conventions and conferences.

There are reports of some U.S. stores running out of basic consumer goods. The state of California has declared a state of emergency due to the coronavirus illness there. On the economic front several major central banks this week have eased their monetary policies to combat the negative economic consequences of the Covid-19 outbreak. More central banks are likely to take action soon, including the European Central Bank.

Recent history shows that some days traders and investors are less concerned about the coronavirus outbreak, and then the next day they are more concerned. Look for continued vacillating markets as the Covid-19 situation plays out. It’s now looking more likely that the event will not be a short-term situation, but instead one that will play out over several months, or longer.

The benchmark U.S. 10-year Treasury note yield today fell below 0.9% to another record low. This has prompted keen concern among long-term market watchers that a U.S. and /or global economic recession looms, including the prospect of debilitating consumer and commercial price deflation.

All of the above are bearish for stocks and most commodities, and bullish for safe-haven assets like gold, the U.S. dollar and U.S. Treasuries. An examination of a chart of the Goldman Sachs Commodity index paints a dour picture for the prospects for the raw commodity sector.

The key outside markets today see Nymex crude oil prices lower and trading around $46.25 a barrel in early trading. Reports said the OPEC oil cartel is close to agreement on a collective oil-production cut to try to stem the slide in oil prices. The U.S. dollar index is trading solidly down today.

by Jim Wyckoff for KitCo News


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