Gold price surges as new Covid strain surfaces

Gold prices are solidly higher in early U.S. trading Friday, on safe-haven demand and short covering by the futures traders, amid a potentially ominous development on the pandemic front. December gold was last up $20.50 at $1,804.30 and December Comex silver was last down $0.02 at $23.47 an ounce.

There is keen risk aversion in the marketplace Friday, on what typically is a very quiet post-U.S.-Thanksgiving-holiday trading day that sees many U.S. markets closing early. A new strain of Covid-19 that is rapidly spreading in southern Africa has produced high anxiety among traders and investors. The European Union and the U.K. are moving to halt air travel from South Africa. Other governments are also moving quickly to try to control the spread of the new strain of coronavirus. Scientists have not determined how quickly the new strain can spread or whether it is resistant to existing Covid vaccines. The World Health Organization is holding an emergency meeting on the matter Friday.

Global stock markets were sharply lower in overnight trading. The U.S. stock indexes are pointed to solidly lower openings when the New York day session begins.

Nymex crude oil prices have plunged to a nearly two-month low of $72.60 a barrel, U.S. Treasury bond and note prices are soaring (yields dropping) on the news. The yield on the U.S. Treasury 10-year note is presently fetching 1.521%, well down from 1.64% seen on Wednesday. Gold prices are sharply higher on safe-haven demand. The other key outside market today sees the U.S. dollar index solidly lower. Bitcoin prices are sharply down and have lost over 7% Friday.

There is no major U.S. economic data due for release Friday.

Technically, December gold futures bulls have the slight overall near-term technical advantage. A seven-week-old uptrend on the daily bar chart is still alive. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,850.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,758.50. First resistance is seen at the overnight high of $1,816.30 and then at $1,825.00. First support is seen at the overnight low of $1,786.40 and then at this week’s low of $1.777.40. Wyckoff's Market Rating: 5.5

The silver bears have the overall near-term technical advantage. A seven-week-old uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at the November high of $25.49 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at the overnight high of $23.735 and then at $24.00. Next support is seen at this week’s low of $23.28 and then at the November low of $23.045. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

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