0Price Gains for Gold, Silver as Bears Now Exhausted
Gold and silver prices saw a strong bounce today after both metals hit eight-month lows overnight. It looks like the heavy selling has finally worn out, helping gold and silver find a short-term bottom. June gold futures were last trading $21.90 higher at $3,057.00, while May silver jumped by $1.19 to $30.44.
Stock markets in Asia and Europe dropped sharply overnight, and U.S. stock indexes are also expected to open much lower, hitting 14-month lows. Some major global indexes, like the S&P 500 and Nasdaq, are either in or close to entering a bear market — meaning they’ve fallen more than 20% from their recent highs.
Market sentiment remains very fearful as the week begins. Growing tensions over trade tariffs between the U.S. and other major economies are sparking worries about a potential recession. Over the weekend, President Trump said the U.S. is “taking medicine” to fix its trade issues. However, pressure is mounting on his administration as Americans watch their 401k savings and stock portfolios shrink. Even loyal supporters like Senator Ted Cruz, Congressman Mitch McConnell, and business leader Elon Musk are beginning to show concern about Trump’s aggressive trade policies.
JP Morgan’s CEO, Jamie Dimon, also warned that tariffs could drive prices higher and slow economic growth — a combination that could lead to stagflation.
The VIX, Wall Street’s fear gauge, shot above 50 today after briefly topping 60 overnight. This level of volatility has only been seen three other times in the past 20 years — during the 2008 financial crisis and at the start of the COVID-19 pandemic in 2020. To put it in perspective, the VIX typically averages just above 19, and its record high was 89 in 2008.
Investors are now expecting the Federal Reserve to cut interest rates five times this year, totaling a 1.25% reduction. There’s even talk that the Fed might step in with an emergency rate cut before its next scheduled meeting.
Looking ahead, many believe that the massive sell-off in stocks could reach a turning point later this week. If that happens, we could also see many commodities, like gold and silver, establish solid price floors. However, it’s difficult to predict at what price levels this stabilization will occur. If markets don’t find a bottom soon, the U.S. and global economies could slide into a recession — or worse.
Meanwhile, the U.S. dollar is slightly lower but still stronger than it was at last week’s six-month low. Oil prices have plunged, with Nymex crude hitting a four-year low around $59.50 a barrel. The yield on the 10-year U.S. Treasury note has dipped below 4%, now sitting at 3.955%, as investors flock to safer assets.
On the economic calendar, the U.S. will release employment trends and consumer credit data today.
Technical Outlook:
Gold futures still show an overall advantage for the bulls, but their momentum has slowed. The strong rebound overnight signals that bears may be running out of steam. Gold bulls aim to push prices above the contract high of $3,201.60, while bears want to break below strong support at $2,950.00. Key resistance levels are seen at $3,084.40 and $3,100.00, while support is at $3,032.70 and $3,000.00. Wyckoff’s Market Rating for gold stands at 7.5.
Silver’s technical situation shows a more balanced battle between bulls and bears. The strong overnight rebound suggests a near-term bottom may have formed. Bulls are targeting a move above $32.00, while bears are looking to push prices under the overnight low of $27.545. Immediate resistance is at $30.76 and $31.00, with support at $30.00 and then $29.50. Wyckoff’s Market Rating for silver is 5.0.
