Commodity Update: Covid-19 Recession

GOLD

Gold is on track to end the week with a sharp weekly drop. Gold opened the week at $1,823 and moved down all week to a low of $1760 before turning higher on Friday to trade back above $1780. This is still a significant drop for the week and the biggest in a month of over 2%. This week the jobless numbers came out weaker than expected and this hurt expectations for a quick economic boost recovering from the COVID-19 crisis. There is also pressure to move from Gold into other industrial metals such as silver and copper that hurt the demand for Gold in the near term, plus some profit taking from last year’s big run up in Gold prices, due to COVID-19 crisis. Currently support is holding firm at $1760, a level set back in July of last year and retested in Dec of 2020 as well, If this level is broken the next strongest support level is 100 points lower at $1680 set during the height of the pandemic. If the recovery can get some legs under it and the U.S dollar can get some footing with the economic activity boosted by the next stimulus, gold should move higher in the near term.

SILVER

Silver has been in a choppy consolidation this week, opening at $27.31 and trading on Friday at $27.20 in late Friday trading. This tight range has stalled the bullish attention that Silver has enjoyed over the last couple of months. The interest in Silver has been more industrial than investment as the demand has been seen to be growing as the economy digs out of the COVID-19 recession. Also, the Silver “squeeze play” by the Reddit investors seems to have run its course and stalled out. With the trading range between $26.50 and $27.50 this week, we will need to see some additional trading outside this range to reestablish a trend. Overall, we have been in an uptrend since late last year but will need to trade above $29 per oz. to establish the bullish trend.

OIL

US Crude Oil has bed a volatile week opening below $60 per barrel at $59.61 and moving up to $62.65 and then losing momentum and closing back below $59 per barrel. Oil moved up as Texas oil production was halted amid the storms over last weekend and earlier this week. Now that production is ramping up after the worst of the freeze is over and electric power is being restored for the most part, output is returning to normal and prices have dropped Thursday and Friday to wipe out the gains early in the week. Prices are still at close to $59 per barrel, above the previous support level or $57 per barrel set last week. The outlook for Oil is to continue higher as demand increase over the next few months as the economy continues to grow out of the COVID-19 Pandemic and supplies are squeezed by producers.

Bill Poulos is a financial educator, former General Motors executive and published author. When he retired in 2001, Poulos and his son Greg founded a financial publishing company, Profits Run, Inc . Profits Run shows beginners how to invest wisely with minimal risk. The company educates investors through various wealth management publications. Automatic Income Engine, Rapid Income Engine, and Premium Income Alert are some of the products implemented by Profits Run to help investors trade smarter with minimal risk. Poulos contributes to a variety of online news sources, providing information on the stock market. Bill married his high school sweetheart, Karen, in 1969. They live in Michigan, where Profits Run is located.

Bill Poulos is an author, retired automotive executive (General Motors), and co-founder of Profits Run, Inc. Bill offers insight into the economy and trading.