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P.M. Kitco Roundup: Gold Sells Off on FOMC Minutes That Favor Hawks, and on Rallying U.S. Dollar

Wednesday October 29, 2014 2:25 PM

(Kitco News) - Gold prices traded solidly lower and hit a three-week low Wednesday afternoon, in the immediate aftermath of the latest FOMC statement that was deemed a bit hawkish on U.S. monetary policy. The U.S. dollar index also surged on the FOMC statement, which also worked to put downside price pressure on gold. December Comex gold was last down $12.40 at $1,216.90 an ounce. Spot gold was last quoted down $11.20 at $1,217.00. December Comex silver last traded down $0.046 at $17.18 an ounce.

The Federal Open Market Committee (FOMC) minutes hint the U.S. central bank could move to raise interest rates sometime in 2015, based upon the committee’s somewhat surprising upbeat assessment of the U.S. economy. The market place was leaning in the direction of an FOMC statement that favored the dovish camp—even though the Fed did end its monthly bond-buying program (quantitative easing) as most expected it would. While the U.S. dollar index surged higher, the Euro currency slumped on the FOMC statement, as it implied divergent paths on which the Federal Reserve and European Central Bank are set to travel.

In overnight news, the German government auctioned a 10-year bund Wednesday and it fetched a record low average yield of 0.87%. Demand was so-so but the record low yield suggests European investors are still bearish on the European Union’s economic and financial conditions.  Germany is the strongest EU economy and its government debt is considered the safest in the EU.

In other news, the International Monetary Fund reported that several world central banks continued to stock up on gold bullion in September. Russia, Azerbaijan and Kazakhstan all raised their gold holdings. Russia led the way by adding 1.2 million ounces last month, the IMF said.

The London P.M. gold fix was $1,223.50 versus the previous London A.M. fixing of $1,228.00.

Technically, December gold futures were near the daily low and hit a three-week low in afternoon trading. The bears have the firm near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,255.60. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,225.00 and then at today’s high of $1,230.40. First support is seen at today’s low of $1,217.00 and then at $1,210.00. Wyckoff’s Market Rating: 2.5

December silver futures prices were near mid-range Wednesday afternoon. The silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.82 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $16.64. First resistance is seen at this week’s high of $17.40 and then at $17.50. Next support is seen at $17.00 and then at $16.64. Wyckoff's Market Rating: 2.0.

December N.Y. copper was up 15 points at 309.45 cents in afternoon trading today. Prices were near mid-range and hit a five-week high early on today. Short covering and bargain hunting were featured. The bears still have the slight near-term technical advantage, but the bulls are making a move and have upside momentum. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 317.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at today’s high of 311.40 cents and then at 312.50 cents. First support is seen at today’s low of 307.80 cents and then at 305.55 cents. Wyckoff's Market Rating: 4.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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