Gold, Silver Prices Hit Multi-Month Highs As Easier Fed Anticipated

(Kitco News) – Gold and silver prices are modestly up and in early U.S. trading Wednesday. Gold notched an eight-month high overnight, while silver prices pushed to six-month highs. Several factors are presently at work supporting the precious metals market bulls. February gold futures were last up $2.10 an ounce at $1,311.00. March Comex silver was last up $0.066 at $15.905 an ounce.

The just-released U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000. Gold and silver prices did retreat just a bit following the release of the report. The ADP report is a precursor to Friday morning’s more important Employment Situation Report issued by the Labor Department.

European and Asian stock markets were again narrowly mixed overnight, ahead of key news events to play out this week. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. A negative earnings report from Apple, released late Tuesday, has U.S. investors in a tentative mood today. This week’s wobbly U.S. stock market is prompting some safe-haven demand in the gold and silver markets.

The economic highlight at mid-week is the Federal Reserve’s Open Market Committee (FOMC) meeting that began on Tuesday morning and ends Wednesday afternoon with a statement on monetary policy. No change in monetary policy is expected. However, traders want to know if the Fed today will tip its hand regarding the course of monetary policy in 2019. Many expect the Fed to lean toward the accommodative side of monetary policy today. Such would be bullish for the raw commodity markets, including the precious metals. Markets could become active and volatile following the results of the meeting, which includes a press conference by Fed Chairman Jerome Powell after the FOMC statement. Powell is getting a reputation for putting his foot in his mouth while making comments to the press or at speeches.

The U.K. parliament on Tuesday evening backed the “Plan B” Brexit initiative from Prime Minister Theresa May. The Parliament had rejected May’s initial Brexit plan. The British pound was not significantly impacted by the news.

U.S. and China high-level trade officials are meeting in Washington, D.C, on Wednesday and Thursday. There is no consensus at all on any progress that may or may not be made at this week’s talks. The U.S. government this week filed new charges against the high-tech company from China, Huawei. President Trump also plans to speak to the Chinese delegation that is in Washington this week.

The political situation in Venezuela is still very fluid at present, with the potential for civil violence. The U.S. on Monday slapped economic sanctions on the country, which is a major oil producer.

The outside markets today see the U.S. dollar index trading near steady. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the Treasury’s quarterly refunding announcement, pending home sales and the weekly DOE liquid energy stocks report.

Technically, the gold bulls have the firm overall near-term technical advantage and have gained power this week. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,330.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,275.30. First resistance is seen at today’s high of $1,310.50 and then at $1,320.00. First support is seen at $1,300.00 and then at this week’s low of $1,296.50. Wyckoff’s Market Rating: 7.0

March silver futures bulls have the near-term technical advantage and have momentum on their side. A 2.5-month-old uptrend on the daily bar chart has been restarted. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the January low of $15.195. First resistance is seen at $16.00 and then at $16.25. Next support is seen at $15.725 and then at this week’s low of $15.61. Wyckoff’s Market Rating: 6.5.

By Jim Wyckoff
For Kitco News


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