Panic Buying Boosts Precious Metals as Banking Worries Loom

(Kitco News) – Gold and silver prices have been bolstered by panic buying, with gold reaching a five-week high and silver a three-week high in midday U.S. trading Monday, as uncertainty around the banking system has investors seeking safe-haven investments. April gold was last up $42.50 at $1,909.90 and May silver was up $1.419 at $21.92.

The jitters in the market have been caused by the collapse of Silicon Valley Bank, the sixteenth largest bank in the U.S. The federal government reassured the public that it would back all depositors in the failed bank. Meanwhile, other smaller U.S. banks are reported to be facing stress due to depositor withdrawals. Government regulators have also taken over Signature Bank, which serves many crypto currency companies.

The Goldman Sachs Group Inc. is now predicting that the Federal Reserve will not raise U.S. interest rates at its FOMC meeting next week, as the mayhem in the banking sector has been put on the Fed’s radar. One market analyst in a Wall Street Journal story today commented, “When the Fed raises rates so quickly, nine times out of 10, it breaks things. We may see more corporate failures; we may see more regional banks go under.”

Global stock markets were mostly lower overnight, while U.S. stock indexes are higher at midday. U.S. Treasury prices have seen strong gains (yields have dropped) on flight-to-quality buying. Bitcoin prices have also jumped. In an attempt to quell investor fears, U.S. President Biden made a television appearance.

The key to watch in the coming days is the U.S. Treasury market. An old adage in the marketplace says that bond traders are the smartest guys/gals in the room. The key 10-year U.S. T-Note yield is presently trading at 3.504%, down from levels that just recently pushed above 4.0%. If U.S. Treasury prices continue to rise sharply (yields fall sharply), such will be an indication that stresses in the U.S. financial system are rising. Other markets, including gold, silver and others, will take their cues from the U.S. Treasury markets over the next few days.

The U.S. dollar index has also sold off sharply the past two trading sessions, while Nymex crude oil futures prices have tanked and hit a three-month low on worries the U.S. financial crisis will crimp global economic growth.

April gold futures prices have hit a five-week high today thanks to safe-haven demand. Bulls have gained the firm overall near-term technical advantage. Bulls” next upside price objective is to produce a close above solid resistance at the February high of $1,975.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00.

May silver futures prices have hit a three-week high today. The silver bulls have gained the slight overall near-term technical advantage. A five-week-old downtrend on the daily bar chart has been soundly negated. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at the March low of $19.945.

May N.Y. copper closed up 220 points at 405.30 cents today. Prices closed nearer the session high and hit a nine-week low earlier. Prices scored a bullish outside day up today. The copper bulls have the slight overall near-term technical advantage but prices are in a seven-week-old downtrend on the daily bar chart. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at the February high of 423.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 385.00 cents.