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P.M. Kitco Roundup: Gold Posts Modest Gains in Wake of FOMC Statement

Wednesday December 17, 2014 2:31 PM

(Kitco News) - Gold prices were modestly higher in afternoon U.S. trading Wednesday, following the much-anticipated FOMC statement that was deemed a bit more dovish than expected, but also somewhat confusing. On the day there was also some safe-haven demand for gold amid this week’s steep slide in the Russian ruble. February Comex gold was last up $6.40 at $1,201.00 an ounce. Spot gold was last up $5.50 at $1,201.00. March Comex silver last traded up $0.258 at $16.00 an ounce.

Traders and investors were still digesting Wednesday's Federal Reserve Open Market Committee (FOMC) statement at the conclusion of its two-day meeting. The Fed left in the words "considerable time" regarding its interest rate policy and the timeframe on raising rates. That was deemed dovish. However, it had other wording that was deemed a bit more hawkish, to somewhat offset leaving in the "considerable time" wording. And many market watchers were just plain confused by what the Fed statement implied. Maybe that's what the Fed wanted: confusion until Fed members, themselves, better figure out what's going on with the U.S. economy and worldwide developments.

Fed chair Janet Yellen was to hold a press conference after the meeting. Her remarks will be closely scrutinized.

The FOMC statement was deemed by gold market traders to be slightly bullish, judging from the modest gains seen right after the statement was released.

The market place is still very concerned about the Russian ruble’s sharp drop this week, hitting a record low versus the U.S. dollar—despite the Russian central bank on Tuesday implementing a big interest rate increase from 10.5%, to 17%. The reverberations in the world currency markets and financial sector are significant. And there are growing worries the deflating ruble could cause a secondary-currency contagion. The ruble did rebound a bit Wednesday when Russian officials said they would start selling their foreign currency reserves to prop up the beleaguered ruble. Gold saw some light safe-haven demand Wednesday on this week’s developments with the ruble.

Crude oil prices were higher in late U.S. trading, on short covering, but still hovering not far above Tuesday’s five-year low of $53.80 a barrel, basis January Nymex futures. Brent crude futures have now fallen below $60.00 a barrel. While such is good news for consumers at the gasoline pumps, the market place has been spooked by crude oil’s steep downdraft.

In other overnight news, the European Union’s consumer price index rose 0.3% in November, year-on-year—for the lowest reading in five years. Month-on-month the CPI was down 0.2% in November from October. The report did nothing to assuage the fears of deflation gaining a grip on the EU economy.

The London P.M. gold fix was $1,195.75 versus the previous London A.M. fixing of $1,199.00.

Technically, February gold futures prices closed near mid-range today. The gold bulls have faded and have lost last week’s momentum. Their next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,225.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at the October low of $1,184.80. First resistance is seen at today’s high of $1,203.10 and then at $1,210.00. First support is seen at today’s low of $1,185.80 and then at $1,184.80. Wyckoff’s Market Rating: 2.5

March silver futures prices closed nearer the session high and saw a corrective upside bounce following strong selling pressure this week. Silver bulls have faded badly this week and their next upside price breakout objective is closing prices above solid technical resistance at the December high of $17.355 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at today’s high of $16.06 and then at $16.25. Next support is seen at this week’s low of $15.54 and then at $15.30. Wyckoff's Market Rating: 2.5.

March N.Y. copper closed up 205 points at 287.85 cents today. Prices closed nearer the session low and scored a bullish “outside day” up on the daily bar chart, after hitting a two-week low early on today. The copper bears still have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 277.75 cents. First resistance is seen at today’s high of 289.25 cents and then at 290.00 cents. First support is seen at today’s low of 2.8700 cents and then at 285.00 cents. Wyckoff's Market Rating: 2.0.

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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