Commodity Update: Volatility Follows U.S. Covid-19 Stimulus Package
Gold opened the week at $1826.50 and initially went down before bouncing higher on the 50 period Moving Average. Gold prices were somewhat volatile this week moving up and down after dropping initially; prices continued higher to a weekly high of $1875 on Thursday before dropping back some on Thursdays and Friday’s trading. Although Gold has been rangy this week, the week will end on a positive note with trading late in Friday’s session just above $1857 for an overall gain. Much of the week’s volatility has been attributed to the new U.S administration’s COVID-19 stimulus package and how quickly that can be implemented to help the economy. Support has been firmly established around the $1820 level and resistance is set about $1880. These are key levels to watch over the next several weeks as either being broken could lead to a continuation in that direction.
Silver has had a positive week opening at $24.72 per oz. before moving up to $26.04 on Thursday before pulling back some on Friday with trading around $25.45. The early gains were mainly due to optimism around the new U.S administration efforts around the Corona Virus stimulus package to help the economy out of the pandemic. The selloff on Friday which is perhaps some profit taking and comes as the broader stock market takes a more pessimistic attitude towards economic growth. The week started by testing the current support level at $24.50 and bounced higher off this level before moving to resistance at $26 per oz. These levels are important to watch as the new policies from the U.S. government are implemented and the economic impacts in the short term on the U.S economy.
U.S. Crude oil has been volatile this week opening at $52.11 per barrel moving up to $53.81 before chopping back down to $52 on Friday. Oil was holding at about $53 until on Friday there were new reports of new COVID-19 case transmission in China which is a large indicator of potential Crude demand. Also, new inventory data has come showing an inventory increase of 4.4 million barrels which impacts crude supplies. If the China cases increase and they are forced to clampdown on economic activity global demand will be impacted pushing the prices lower. Current support is $52 which held this week and the resistance of $54 set last week is the current trading range. If prices push outside of this range, higher or lower, we might have an indication for some additional price action to new levels.
Bill Poulos holds a degree in engineering, an MBA in finance, and has over 4 decades of trading experience. After retiring from General Motors in 2001, Bill started Profits Run, LLC with his son Greg. Profits Run’s stated goal is to help everyday people learn how to invest with minimal risk. Bill has developed many products including Crypto Earning Alert, Fast Income Engine, Premium Income Alert, 20/30 Wealth Trader, Earning Notification, Premium Income Letter and Auto Income Engine. Bill lives in Michigan with his wife of over 50 years, Karen. Follow Bill for regular updates on commodity trading.