LME metals rebound after Friday’s correction but prices weaker in Shanghai

LME metals rebound after Friday’s correction, but prices weaker in Shanghai

The broader markets were mixed on the morning of Monday February 10, with equities in Asia generally weaker, as were metals on the Shanghai Futures Exchange, while the London Metal Exchange was firmer across the board.

There is still much uncertainty around the impact of the Wuhan coronavirus (2019-nCoV), but with more businesses returning to work in China this week, we might get a better feel for the likely impact on Chinese demand.

With China generally a net importer of metals, the demand shock could well see inventories build up in the country and along the supply chains that supply China, while exports of products are also likely to continue to be disrupted.

China’s CSI 300 is up by 0.21%, while other Asian equity indices are lower

Gold prices are edging higher again, recently quoted at $1,571.40 per oz

Base metals

Three-month base metals prices on the London Metal Exchange were up by an average of 0.9% this morning, but this is after an average fall of 1.9% on Friday. Nickel led the gains this morning, with a 1.4% rise to $13,005 per tonne, followed by a 1.3% rise in tin to $16,500 per tonne, while copper is up 0.9% at $5,704 per tonne.

Trading volumes have been above average again with 9,871 lots traded as of 5.37am London time.

In China, the most-traded base metals contracts on the Shanghai Futures Exchange were, for the most part, weaker and down by an average of 0.4%, with April aluminium the only metal bucking the trend with a 0.1% gain, while April zinc led on the downside with a 1% fall. April copper was off 0.4% at 45,650 yuan ($6,532) per tonne.

The spot copper price in Changjiang was down by 0.6% at 45,260-45,315 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8, compared with 7.99 on Friday. The ratio was around 7.88 before the Lunar New Year holiday.

Precious metals

Precious metals were firmer this morning. The spot gold price was little changed at $1,571.38 per oz, but that was up from $1,565.58 per oz at a similar time on Friday morning. Silver prices were also little changed at $17.73 per oz, while platinum and palladium were up by 1.1% and 0.8%, respectively.

Wider markets

The yield on benchmark United States 10-year treasuries has weakened and was recently quoted at 1.59%, compared with 1.63% at a similar time on Friday. The German 10-year bund yield was slightly weaker too and was recently quoted at -0.39%, compared with -0.37% at a similar time on Friday.

Asian equities were for the most part weaker this morning – with the Nikkei down 0.6%, the Kospi down 0.49%, the ASX 200 down 0.14% and the Hang Seng down by 0.56%), while China’s CSI 300 was down by 0.27%.


The dollar index (98.63) is holding in high ground, but other major currencies are mixed, with the yen (at 109.83) firmer on the back of haven interest, the Australian dollar (0.6705) is also firmer, while sterling (1.2901) and the euro (1.0954) are weaker.

Key data

Economic data already out shows China’s consumer prices index rose 5.4% against an expected rise of 4.9%. The index has been climbing at a fast pace since February last year when it troughed at 1.5%. China’s producer price index climbed 0.1%, this after being negative since August last year. Japan’s economy watchers sentiment index climbed to 41.9, from 39.8 previously. Later there is data on Italian industrial production and EU Sentix Investor confidence.

In addition, Federal Open Market Committee members Michelle Bowman and Patrick Harker are speaking.

Today’s key themes and views

For now, concerns about supply disruptions from China seem to be lifting base metals prices on the LME, while weaker prices on SHFE seem to be reflecting the likely demand situation in China. Overall, the combination of China being a net importer of most base metals and with the country facing a negative demand shock, it would not be unreasonable to expect prices to be weaker, but this might already have been priced-in, given the price weakness seen in the second half of January.

We expect choppy trading in the days and weeks ahead, until more is known about how big the demand shock will be.

Gold prices are edging higher and are likely to continue to do so until more is known about when the Wuhan coronavirus will be brought under control. Prices might well have been rising at a faster pace were it not for the stronger dollar and generally strong equity markets.


Published onFebruary 10, 2020 09:08 AM By William Adams

Gold steadies as coronavirus fears counters China economic data

Gold steadies as coronavirus fears counters China economic data

* Coronavirus death toll crosses 900

* Dollar touches 4-month peak By Asha Sistla Feb 10 (Reuters) – Gold prices held steady on Monday, as rising concerns over the severity of the coronavirus outbreak and its impact on the global markets offset slight pressure from positive economic data from China and the United States.

Spot gold was little changed at $1,569.05 per ounce by 0313 GMT. U.S. gold futures were flat at $1,572.70. A team of international experts led by the World Health Organization left for Beijing to help investigate the epidemic that claimed more than 900 lives in mainland China, surpassing the death toll from the SARS epidemic. Asian shares fell on market fears over the fallout from the epidemic. "There's still a great deal of uncertainty around the (virus) impact and we're seeing rising deaths and infections. The economic impacts are still unclear. If that's the case, we'll continue seeing reasonable support for gold," said Michael McCarthy, chief market strategist at CMC Markets. However, he said that a rise in China's January producer and consumer prices "minutely hurt" gold. Also capping gold's gains, the dollar touched a four-month peak earlier in the session against a basket of rival currencies after robust U.S non-farm payrolls data on Friday. The U.S. Federal Reserve said the U.S. economy slowed last year on weak global growth, but the likelihood of recession has declined.

The central bank flagged as risks the fallout from the coronavirus, "elevated" asset values and near-record levels of low-grade corporate debt. "Investors should continue to favour more defensive fixed income and, therefore, long gold positions until the impact of nCoV on growth becomes apparent," Stephen Innes, chief market strategist at AxiCorp, said in a note. Holdings of the world's largest gold-backed exchange-traded fund SPDR Gold Trust rose 0.13% to 916.08 tonnes on Friday, its highest since Oct. 29. Palladium advanced 0.6% to $2,329.83 an ounce, silver edged higher by 0.2% to $17.70, and platinum rose 0.6% to $970.83.

(Reporting by Asha Sistla in Bengaluru; Editing by Arun Koyyur)

Sunday February 09, 2020 22:52

Gold mine gangs tote AK-47s to outgun South African Police

Gold mine gangs tote AK-47s to outgun South African Police

Barberton Mines are now using state of the art equipment to trace illegal miners. Gold mines offer soft targets for syndicates that previously specialized in cash-in-transit heists. Picture: Simphiwe Mbokazi

JOHANNESBURG – At 10 p.m. on the second Sunday in December, a criminal platoon armed with AK-47 and R6 assault rifles stormed one of the largest gold mines still operating on South Africa’s fabled Witwatersrand basin.

Moving with military precision, the 15 attackers took hostages and plundered the smelting plant at Gold Fields Ltd.’s South Deep mine. While failing to break into the main vault, the gang escaped three hours later with gold concentrate worth as much as $500,000.

Violent crime soared through a decade of kleptocracy and graft under South Africa’s former President Jacob Zuma.

Gold mines offer soft targets for syndicates that previously specialized in cash-in-transit heists.

Their foot-soldiers outgun a demoralized police force and pile woes on a gold industry in the final stages of a decades-long death spiral.

“Mining companies are being attacked by thugs and armed gangs and there is a lack of police response,” said Neal Froneman, chief executive officer of Sibanye Gold Ltd., which repelled an attack on its Cooke mine two weeks ago. “It eventually has a knock-on impact into society, it’s lawlessness, it’s anarchy.”

There were 19 attacks on gold facilities last year, almost double the number in 2018, according to South Africa’s Minerals Council. More than 100 kilograms (3,527 ounces) of gold was stolen in 2019 as bullion rose to a five-year high, although not all companies disclose their losses, said the council, which represents the nation’s largest miners.

The attacks are part of a wave of violent crime. Murders in South Africa climbed to the highest in a decade, with an average of more than 50 people killed each day. Violent robbery has surged and last year President Cyril Ramaphosa’s government deployed the army in Cape Town to quell gang-related killings.

Ramaphosa has made combating crime a top priority since taking office in one of the world’s most unequal societies in 2018. While the violence is partly a legacy of apartheid rule that ended in 1994, his efforts have been hindered by the gutting of the National Prosecuting Authority and other law-enforcement agencies under his predecessor Zuma.

“The fundamental problem is police are not getting on top of organized violent crimes,” said Gareth Newham, who heads the justice and violence prevention program at the Institute for Security Studies in Pretoria. “We are seeing a deterioration in our policing capacity.”

An abandoned shaft at the Blyvooruitzicht Gold Mine near Carletonville proves attractive for illegal miners. Gold mines offer soft targets for syndicates that previously specialized in cash-in-transit heists.

After meeting with gold mining companies in October, Minister of Police Bheki Cele is considering plans to set up a task force to tackle the violence, said Lirandzu Themba, a spokeswoman for the ministry.

When 50 robbers overwhelmed security at Gold One International Ltd.’s smelting plant in May, the police held back from engaging with the gang after they were fired on, according to Jon Hericourt, vice president of operations at the Chinese-owned miner. Since the gang made off with an unspecified quantity of gold, the police have only provided scant information on its investigations, he said.

Gold One has beefed up security and switched its focus from thwarting internal theft to combating all-out assaults. Still, Hericourt doubts that will be enough.

“It’s not a mining company’s job to take on gangs like this, it’s the government’s job,” he said.

Sibanye has also strengthened its defenses after the nation’s biggest gold producer repelled several attacks last year, said Head of Security Nash Lutchman. Combat training is now standard practice for guards, who wear bulletproof jackets and patrol in armored vehicles at night.

Still, their shotguns and 9-millimeter pistols can’t compete with the automatic weapons used by gangs. The raids take months to plan, with the gangsters coercing mine employees into providing inside knowledge, Lutchman said.

“It’s military precision in terms of planning and execution,” he said. “No smelting plant is going to have sufficient manpower and fire power to defend an onslaught from 20 or 30 attackers.”

Gold mines offer soft targets for syndicates that previously specialized in cash-in-transit heists.

In the final quarter of 2019, both Harmony Gold Mining Co Ltd. and DRDGold Ltd. suffered fatalities during assaults.

The attacks are putting additional pressure on South Africa’s 130-year-old gold industry, forcing companies to increase spending at often marginal mines that were already battling against incursions by illegal miners. That’s compounding the geological challenges of the world’s deepest mines, deterring investors already concerned by the country’s power-supply crisis.

“It can potentially have a knock-on effect to potential investors as well because they are not going to invest in gold in South Africa because it’s too risky,” said Gold One’s Hericourt.



Gold price is eyeing central banks’ reaction to coronavirus – INTL FCStone

Gold price is eyeing central banks' reaction to coronavirus – INTL FCStone

Gold price is eyeing central banks’ reaction to coronavirus – INTL FCStone

(Kitco News) Trying to measure economic fallout from the coronavirus is a difficult task, but when it comes to figuring out the virus’ impact on gold, investors should be paying attention to what central banks around the world are doing.

Any additional easing that might stem from slower economic growth will boost the case of holding gold long-term, said Rhona O’Connell, INTL FCStone head of market analysis for the EMEA and Asia regions.

“The potential industrial fallout from coronavirus is already leading a number of governments to cut interest rates or add to easing activity, while the U.S. 10-year bond has been dipping in and out of negative territory. This is all positive for gold in a risk-averse environment, although by definition we cannot know for how long it will be before this outbreak is controlled,” O’Connell wrote on Wednesday.

Equities have been rising this week as they recover from an earlier sell-off triggered by coronavirus fears. Gold saw some selling but managed to hold its $1,550 support level and consolidate above the $1,560-an-ounce level.

“The ?nancial markets have been a hive of activity since China’s return and after a rout on Monday … There was an almost palpable wave of relief on Tuesday when the People’s Bank of China (PBoC) continued injecting liquidity on a grand scale. This propelled Chinese equities higher and equities around the world were happy to take their cue accordingly,” O’Connell said.

But these market moves are just short-term noise, she added. What investors should be focusing on is what central banks from around the world decide to do next when dealing with the economic fallout from the virus.

“Asian governments are already starting to look at interest-rate decisions,” O’Connell pointed out. “Thailand has already cut rates … to a record low of 1.0% for its benchmark rate, arguing that a large number of businesses would be a?ected by the coronavirus as well as drought and a delay in passing the budget.”

The Philippines' central bank also cut rates this week by 25 basis points to 3.75% in response to the coronavirus.

On top of that, the Reserve Bank of Australia could be looking at cutting rates soon if economic growth is not fast enough in light of bush?res and coronavirus fallout. Other countries that recently cut rates further include Iceland and Bahrain. The European Union and Japan’s interest rates are already in the negative territory, O’Connell added.

“The interest-rate environment and the injection of liquidity into di?erent economies could well add a supportive factor to the market. Arguably this is already being priced in, but it should continue to be a tailwind in an era of ?nancial risk,” she wrote.


By Anna Golubova

US Mint gold coin sales see a sharp jump after worst year on record

U.S. Mint gold coin sales see a sharp jump after worst year on record

U.S. Mint gold coin sales see a sharp jump after worst year on record

(Kitco News) U.S. Mint gold coin sales saw a strong recovery in January after the weakest year on record in 2019.

The big story last year was contrasting sales between The Perth Mint of Australia, which saw a surge in gold coin sales, and the U.S. Mint, which reported dwindling sales throughout the year.

The latest data from the U.S. Mint, however, show a significant recovery with gold coin sales beginning the year with a bang. Important to note when looking at these numbers is that January is traditionally the strongest month of the year for the U.S. Mint.

A total of 60,000 ounces of the gold American Eagle coins were sold in January, which is a staggering increase of 2,900% from the previous month that saw only 2,000 ounces sold, according to the U.S. Mint data. This also marked the most ounces sold on a monthly basis since January 2019, which stood at 65,000.

From the silver side of things, the U.S. Mint sold a total of 3,846,000 one-ounce American Eagle coins in January, which is a massive uptick from zero ounces sold in December and 463,000 ounces sold in November.

In comparison, The Perth Mint reported selling 48,299 ounces of gold coins and minted bars in January, which is 39% lower than the December total of 78,912 ounces sold.

The gold price likely had nothing to do with a surge in sales in January as the yellow metal started the year off on a strong note, with spot gold briefly trading above $1,600 an ounce at the beginning of January.

In 2019, U.S. gold coin sales struggled as the U.S. Mint reported the worst year on record in terms of the American Eagle gold coins sales despite gold seeing the best year in nearly a decade.

A total of 152,000 ounces of the gold American Eagle coins were sold in 2019, which is 38% less than in 2018, according to the latest U.S. Mint data. This marked the lowest sales on record since the U.S. Mint began recording the figures in 1986.

Sales of silver American Eagle coins were the worst since 2007, with only 14,863,500 ounces sold in 2019, down from the already weak figure of 15,700,000 reported in 2018. In 2007, sales were only at 9,887,000 ounces.

One of the reasons for the higher gold price and weak bullion demand was investors choosing to hold gold in other forms, such as gold-backed ETFs and futures, according to analysts.

“It was mainly professionals, hedgers and you had a lot of buying from South America,” RBC Wealth Management managing director George Gero told Kitco News back in December. “Money that normally could have gone into gold coins ended up going into gold ETFs or gold futures.”

The Perth Mint, on the other hand, attributed its 2019 year-end surge in gold coin sales to Germany, which was behind most of the purchases.

Gold coin and minted gold bar sales from December showed a 45% uptick compared to the previous month. There was a total of 78,912 ounces of gold coins and minted bars sold in December, marking the highest monthly increase since October 2016, The Perth Mint said in December. The year-over-year comparison shows that sales were up 170%.

“We were happily surprised by the numbers in December. Just bear in mind, most of these sales have actually gone into Germany,” Neil Vance, Group Manager Minted Products at The Perth Mint, told Kitco News.

Germany had a new law that came into effect on January 10, which limited the anonymous gold purchase buying from EUR €10,000 to EUR €2,000. “That may explain part of the reason why December was quite large,” Vance said.


By Anna Golubova
For Kitco News
Wednesday February 05, 2020 14:13

Gold falls 1 as China works to stem economic impact of virus

Gold falls 1% as China works to stem economic impact of virus

* Gold to stay in $1,550-$1,600/oz range for now – analyst

* Palladium jumps more than 4%

* U.S. factory orders rise above expectations

By Diptendu Lahiri

Feb 4 (Reuters) – Gold slid more than 1% on Tuesday as China’s steps to mitigate the economic impact of the coronavirus epidemic drove some investors away from safe havens and back into riskier assets.

Spot gold fell 1.61 % to $1,550.69 per ounce by 1:40 p.m. EST (1840 GMT), after hitting its lowest since Jan. 21 at $1,548.70. U.S. gold futures settled down 1.7% at $1,555.50.

“The dramatic move in global equity markets, especially in the U.S. markets, clearly indicates there is lesser concern about coronavirus denting GDP and we have a lesser need for safe havens,” said David Meger, director of metals trading at High Ridge Futures.

Wall Street built on a recovery in world stocks as fresh intervention by China’s central bank calmed investor nerves.

Beijing’s efforts included signing off on more government spending, tax relief and subsidies for virus-hit sectors, policy sources said.

The outbreak has undermined the country’s economic activity as cities are locked down, with travel restrictions and businesses closed.

Further, the dollar strengthened, making gold more expensive for buyers holding other currencies.


Nevertheless, some uncertainty remained about the extent of the impact on the Chinese and global economies.

“In case the impact of the virus is less than the market has priced in, it could lead to a correction in gold prices, but as long as we don’t see economic growth accelerate, gold prices will remain supported,” said Quantitative Commodity Research analyst Peter Fertig.

Some traders have also started to price in a cut to U.S. interest rates by June.

Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.

Gold should stay within a range of $1,550 to $1,600 an ounce ahead of more political and economic headlines, George Gero, managing director at RBC Wealth Management, said in a note.

On the economic front, new orders for U.S.-made goods rose 1.8%​​ in December, beating analysts’ consensus forecast of a 1.2% gain.

India’s gold imports in January plunged 48% from a year earlier as a rally in local prices near record highs prompted buyers to curtail purchases, a government source said.

Elsewhere, palladium gained 4.5% to $2,423.76, after touching its highest since Jan. 24 at $2,435.

“Now that optimism has returned to financial markets, it seems that market participants have forgotten their fears of how the spread of the coronavirus might affect demand,” Commerzbank analysts said in a note.

“Nonetheless, the consequences for China, the main consumer of palladium, are likely to be very serious.”

Silver fell 0.5% to $17.57, while platinum dipped 0.4%, to $962.83


(Reporting by Diptendu Lahiri and Sumita Layek in Bengaluru; Editing by Richard Chang and Tom Brown)

Gold prices have formed a bottom – expect the next rally to target 1900

Gold prices have formed a bottom – expect the next rally to target $1,900

Gold prices have been consolidating for a few months already, and the next breakout could take prices to 2011 highs of $1,923, this according to Peter Reznicek, head trader at shadowtrader.net.

“For me, the target just has to be the prior all-time high in 2011. I’m just looking at the $1,923 level, that would be fine, and then reassess the situation from there,” Reznicek told Kitco News.

Gold prices have been trading between $1,500 and $1,600 for quite some time, but Reznicek said that this consolidating movement is a very bullish sign.

“I like gold, I’m a long-term bull, I have been a long-term bull for quite some time. The way that I like to look at gold is simply to keep the technicals on as long of a timeframe as possible, so for me, I always go out to the monthly and I trade gold contracts, ETFs, and options as well according to those monthlies,” he said.

He added that since 2000, the market has been in a long-term uptrend that has just developed a bottom.

“This bottom on the monthly has taken years to develop and we’ve only started to see the breakout from that in about mid-2019 and that’s the rally that’s underway now,” Reznicek said.


By Kitco News


Gold price starts week with small gains as China returns from holidays coronavirus continues to spread

Gold price starts week with small gains as China returns from holidays; coronavirus continues to spread

(Kitco News) – Global financial markets are taking the further escalation in the coronavirus in stride as S&P 500 futures start the new trading week in slightly positive territory.

However, investors aren't entirely ignoring risks as gold prices are also starting the week in positive territory, with some analysts looking for prices to push to $1,600 an ounce in the near-term.

March S&P 500 futures last traded at 3234 points, up 0.32% on the day; meanwhile, February gold futures last traded at $1,588.70 an ounce, up 0.37% on the day.

Market analysts and investors are particularly focused on this week's Asian open as China returns from its week-long Lunar New Year celebrations. However, investor sentiment could remain subdued; according to Chinese media, the China Securities Regulatory Commission had issued a verbal directive to brokerages to bar their clients from selling borrowed stocks.

The People's Bank of China is also pumping $21.7 billion into money markets to make sure there is enough liquidity as markets reopen after the holiday week.

The steps come after news that the coronavirus continues to spread. According to media reports, more than 300 people in China have died as a result of the virus. The number of infected people has jumped to more than 14,000.

International media are also reporting that the first person outside of China has died from the coronavirus.

It is still unclear what impact the virus will have on the health of the global economy. Still, some economists are already expecting to see a significant slowdown.

"There is still such little clarity on the fallout on China's economy, although we know it's going to be brutal and traders naturally are sensing an inevitable fallout in activity in China's key trade partners," said Chris Weston, head of research at Pepperstone in a report Sunday.

The growing uncertainty continues to support gold prices, according to some analysts.

In a recent comment to Kitco News, Lukman Otunuga, senior research analyst at FXTM, said that he is closely watching $1,600 an ounce.

"Growing fears over the coronavirus outbreak and negative impacts it may have on global economic growth should stimulate appetite for gold in the week ahead. Gold is trading around $1585 as of writing and could target $1600 in the short to medium term as risk aversion remains a dominant market theme," he said.

Other analysts have been disappointed with gold's performance in the face of growing negative investor sentiment. However, analysts at Capital Economics, said that gold prices have a chance to rally further as the virus continues to spread.

"There is scope for gold to rise much further if the Wuhan virus is not contained in the coming weeks. Indeed, if factory closures are further extended across mainland China, there could be a global economic fallout, which would be supportive of the gold price," the analysts said in a report Friday.


By Neils Christensen

For Kitco News

PRECIOUS-Gold set for best month in five as virus stifles risk appetite

PRECIOUS-Gold set for best month in five as virus stifles risk appetite

* World share index heads for worst week since August

* WHO opposes restrictions on travel or trade with China

* Gold gains over 4% so far this month, Palladium up 18%

Jan 31 (Reuters) – Gold prices rose on Friday and were heading for their best month in five as worries over economic growth due to the fast-spreading coronavirus boosted appetite for safe havens.

Supply-squeezed palladium, meanwhile, was on track for its biggest monthly percentage gain since November 2016.

Spot gold was up 0.8% at $1,585.66 per ounce by 01:55 p.m. EST (1855 GMT). The metal has gained more than 4% so far this month.

U.S. gold futures settled 0.1% lower at $1,587.90.

“Coronavirus continues to be a strong factor of support as we are seeing global growth concerns hurting other markets across the board. As a result, we’re seeing safe-haven demand drive into gold,” said David Meger, director of metals trading at High Ridge Futures.

“Gold is the quintessential safe-haven asset that money managers are viewing as an alternative for cash.”

The World Health Organization declared the epidemic a global emergency after the virus killed more than 200 people.

“At this point, it’s not something the Chinese economy can shrug off. There will be a hit to growth, the magnitude of which will be difficult to chisel out in detail for quite a while,” said Ilya Spivak, a senior currency strategist at DailyFx.

The virus fears gripped financial markets, overshadowing the latest batch of upbeat corporate earnings.

“Gold is both continuing to find favour as a traditional safe haven and, at the same time, run into strong resistance on the run-up to $1,600, which is keeping a lid on gains,” OANDA analyst Craig Erlam said in a note.

On the physical side, however, an extended holiday in top consumer China due to the outbreak dimmed activity in Asian bullion hubs.

Auto-catalyst palladium, which is in short supply, has risen 18% so far this month, having hit a record high of $2,582.19 per ounce on Jan. 20. On the day, palladium was down 1.2% at $2,283.19.

“Palladium prices have really been in their own world … there is lot of demand for it in a tight supplied environment. We are seeing what industrial demand can do for prices,” High Ridge Futures’ Meger said.

Silver rose 1.1% to $18.02 an ounce. Platinum dipped 1.9% to $959.33 and was on track for its worst week since early November. (Reporting by Brijesh Patel in Bengaluru; Editing by Chris Reese and Steve Orlofsky)


By Brijesh Patel


Gold silver prices gain as coronavirus fears quickly return

Gold, silver prices gain as coronavirus fears quickly return

Gold and silver prices are higher, with silver posting solid gains, in early U.S. futures trading Thursday. Marketplace focus Thursday is right back on the coronavirus outbreak that is spreading. February gold futures were last up $7.10 an ounce at 1,577.50. March Comex silver prices were last up $0.263 at $17.75 an ounce.

The U.S. economic data point of the day Thursday saw the advance estimate of fourth-quarter GDP come in at up 2.1% on an annual basis, which is in line with market expectations. Markets showed little reaction to the report.

Asian and European stock markets were mostly lower overnight. Mainland China markets remain closed for the Lunar New Year holiday. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins.

After Tuesday and Wednesday shrugging off the coronavirus outbreak that is still not at all contained and apparently escalating, the marketplace on Thursday is again on edge and risk averse regarding the matter. The latest reports say over 7,700 Chinese are afflicted and over 170 have died. Global businesses located in China are closing their doors there and worldwide flights to China are being cancelled. The coronavirus outbreak is now being deemed more expansive than the SARS outbreak that occurred in Asia over 15 years ago.

U.S. traders are wondering if the seriousness of the coronavirus situation in China will give China a legal “out” on its recent signed trade-deal pledge to buy significantly more U.S. agricultural products in the next couple years.

At his press conference after the FOMC meeting conclusion Wednesday afternoon, Fed Chairman Jerome Powell said the coronavirus outbreak could have consequences for global economic growth and said the Fed is monitoring the situation closely. That comment along with other less upbeat remarks on the U.S. economy from Powell, including saying U.S. business investment and U.S. exports are weak, boosted the gold and Treasury markets and pushed U.S. stock indexes off their daily highs. Crude oil prices also sunk at the same time. There is now talk in the marketplace that the Fed will be forced to lower U.S. interest rates later this year.

The FOMC at this week’s meeting held U.S. interest rates steady during its first policy meeting of the year and of the new decade, as expected. The benchmark federal funds rate remains in a range between 1.5% to 1.75%, where it has been for the past few months. The FOMC statement said the U.S. economy and labor market are growing moderately amid inflation that is non-problematic. Annual U.S. inflation remains below the 2% level that the Fed would like to see.

The key outside markets today see crude oil prices lower and trading around $52.25 a barrel. Meantime, the U.S. dollar index is slightly lower on a corrective pullback after hitting a two-month high earlier this week.

Technically, the gold bulls have the overall near-term technical advantage, but the January spike high is still strong chart resistance to overcome. A price uptrend is in place on the daily chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,613.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,550.00. First resistance is seen at today’s high of $1,582.40 and then at this week’s high of $1,588.40. First support is seen at the overnight low of $1,574.90 and then at $1,570.00. Wyckoff's Market Rating: 6.5

March silver futures bears have the slight overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $18.375 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $17.85 and then at $18.00. Next support is seen at the overnight low of $17.52 and then at this week’s low of $17.28. Wyckoff's Market Rating: 4.5.

By Jim Wyckoff
For Kitco News
Thursday January 30, 2020 08:38

The Social Media Expert