(Kitco News) – Gold and silver prices are down and have extended overnight losses in early U.S. trading Wednesday. Gold futures prices have dropped to a four-week low. The metals are again seeing pressure from a stronger U.S. dollar index today. Risk aversion remains very low in the world marketplace at present, which continues to squelch buying interest in the safe-haven metals. December gold futures were last down $7.10 an ounce at $1,192.00. December Comex silver was last down $0.146 at $14.25 an ounce.
Traders are still digesting this week’s Federal Open Market Committee (FOMC) meeting that saw the Fed on Wednesday afternoon slightly raise U.S. interest rates, by 0.25%, to a range of 2.0% to 2.25%. The move was expected and marks the third rate rise this year. The FOMC removed the word “accommodative” from its statement, which suggested to some the U.S. central bank is moving closer to the end of the current rate-hike cycle. The Fed is now on pace to raise rates another quarter-point this year and then three times in 2019. The Federal Reserve officials said long-term U.S. inflation prospects remain unchanged and non-problematic despite the recent strong U.S. economic growth. Fed Chairman Jerome Powell held a press conference after the FOMC statement. He said the U.S. economy is in a good place right now, but added the Fed’s monetary policy is still leaning to the accommodative side.
Veteran market watchers reckon the Fed cannot keep tightening U.S. monetary policy by raising interest rates while at the same time see the U.S. economy growing so strongly–and without igniting inflation fears. President Trump has already weighed in on the matter and has admonished the Fed for raising interest rates.
Meantime, China-U.S. relations continue to sour, as Trump on Wednesday accused China of meddling in the upcoming U.S. elections.
Focus in Europe is now on the new Italian government’s economic plans to address its fiscal and financial problems, which are required by European Union law. Many believe Italian lawmakers won’t comply with EU rules on the matter. The Euro currency is pressured today on reports Italy will delay its fiscal and economic projections.
The key outside markets today find the U.S. dollar index higher on an upside correction from recent selling pressure. Meantime, November Nymex crude oil prices are higher and trading around $72.50 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, durable goods orders, pending home sales, the Kansas City Fed manufacturing survey, and the third estimate of second-quarter gross domestic product.
Technically, gold bears have the overall near-term technical advantage and gained some downside momentum today. Gold bulls’ next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,220.70. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the August low of $1,167.10. First resistance is seen at $1,200.00 and then at this week’s high of $1,208.80. First support is seen at $1,189.50 and then at $1,180.00. Wyckoff’s Market Rating: 2.5
December silver futures bears have the overall near-term technical advantage, but recent price action also suggests a market bottom is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $13.50. First resistance is seen at this week’s high of $14.595 and then at $14.75. Next support is seen at this week’s low of $14.22 and then at last week’s low of $14.065. Wyckoff’s Market Rating: 3.0.
By Jim Wyckoff
For Kitco News