Weekly Commoditie: Coronavirus Continues

Bill Poulos is a stock market investor, an published author, and a retired executive from General Motors. When he retired, he took his hobby of investing to Profits Run, Inc. He co-founded the company with his son, Gregory Poulos. The publishing company uses Bill’s investment experience to educate investors on making calculated trades with minimal risks. Profits Run provides content on finance and economics, like videos, articles, software programs, and coaching to the investment community. Bill earned BS in Engineering and an MBA with an emphasis in finance. Bill Poulos’s books can be read on Amazon. He pens articles for online news platforms with current economic events. Bill married his high school sweetheart, Karen, in 1969. They reside in Wixom, Michigan where they enjoy spending time with their grandchildren. Here, Poulos gives us an update on the commodities market.

GOLD

Generally when you have a downturn in stocks, Gold and other precious metals are used as an offset to the risk and demand increases and prices go up. This week however, the meltdown in stocks has been more than we have seen in more than a decade, forcing funds to liquidate winners to compensate for losers, which is what we are seeing. This is all due to the fear of the potential spread of the Coronavirus Covid-19 globally and the negative economic potential. To put this in perspective, this week gold gave up all of last week’s gains and then some. We started the week at $1643 and crashed right down to $1563 on Friday before moving back above $1570. This created a new support for level right at $1560. The key number here is $1600 level which on Friday’s drop cut though like soft butter. From a technical standpoint, prices have fallen all the way back to the 50 SMA and has at least for this week is holding at that support. This may indicate that maybe the bloodbath is over, but it may continue into next week, we won’t really know until more news comes out over the weekend and trading starts on Monday. But “volatility” is the cautious word for the week. If the prices can hold here and move back above $1600 the worst could be over, but until then, batten down the hatches.

SILVER

Silver took a huge hit for this week, sliding to a 10 week low on Friday down about 7.5% for the week. Silver also broke below the 50 SMA major support level. This drop unlike the gold drop appears to be more from potential weaker demand due to the virus outbreak. With potential economic slowdown the demand for silver is naturally a big question mark. Prices are for now holding above $16.50 per oz in late Friday trading, a far cry from the $18.50 level at the start of the week. Also the Fed is watching closely at the devastating economic impacts of the virus and could potentially change their current stance of holding rates steady. We will need to wait and see.

OIL

Oil prices have had the worst weekly loss since the recession of 2008. This weekly downturn continued on Friday to push the price of Oil down to below $44 per barrel on Friday as the potential for a negative demand shock gets stronger due to the spreading of the coronavirus. This is the lowest price for crude in over a year. US Oil crude prices started the week at $52.51 per barrel after moving moderately higher last week. Until the markets find some equilibrium, this weakness in oil prices is most likely to continue. Currently sitting at solid support, if prices drop below $40 per barrel, the longer term support set back in 2016 right at $30 per barrel could be possible. Hopefully the virus spread can be weakened and contained in the next several weeks and the markets can resume their more normal patterns once demand is shored up for the global economy.

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.

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