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Gold Near Steady After Sinking to 5.5-Year Low Earlier; FOMC Minutes Suggest Rate Hike Coming in Dec.

(Kitco News) - Gold prices are slightly firmer in choppy trading in the aftermath of the latest minutes of the last Federal Reserve Open Market Committee (FOMC) meeting. The minutes contained no big surprises for the marketplace, but the committee members agreed U.S. economic conditions are now in place for an interest rate increase in December. The slight pop in the gold market is a classic “sell the rumor, buy the fact” scenario, after so much hand-wringing and market speculation in recent weeks and months on just when the Fed will make its first interest rate rise in nine years. Earlier Wednesday, gold prices hit a 5.5-year low. The precious metals bears remain in firm technical command of their markets. February Comex gold was last up $1.10 at $1,070.10 an ounce. March Comex silver was last down $0.056 at $14.145 an ounce.

One potentially precious-metals-bullish element in the FOMC minutes was the reference that any future U.S. interest rate increases will be gradual in nature. Many market watchers had believed the Fed will raise interest rates by 0.25% in December. Today’s FOMC minutes bolstered those notions. Most market participants will be glad when the rate hike occurs, so the general discourse of trading and markets can focus on something else.

Gold bulls have been disappointed there has not been more robust safe-haven demand following the major terror attacks in Paris. The modest safe-haven demand for gold that has been seen has been trumped by the rally in the U.S. dollar index, which has hit a seven-month high this week. Also, copper prices hit a six-year low this week.

With gold’s decline to a 5.5-year low today, fresh longer-term chart damage has been inflicted to now suggest a challenge of the $1,000.00 level in the coming weeks or few months.

World stock markets were mostly near steady to slightly weaker Wednesday, as there was gunfire and an explosion in a Paris neighborhood that made for some uncertainty in markets. French authorities captured terrorists who were hiding out. However, so far this week the mood of the marketplace has been one of getting back to normal business and not letting the recent terror events have a major impact on regular activities. Most world stock markets have seen price gains this week.

A German two-year note auction fetched record low yields Wednesday, which is a sign that market participants expect the European Central Bank to implement new monetary policy stimulus measures soon. The average yield on the German notes was -0.38%.

Technically, February gold futures prices closed nearer the session high today. The gold bears have the solid overall near-term technical advantage. The door is opened to a challenge of major psychological resistance at $1,000.00 in the coming weeks. Gold prices are in a steep four-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,085.00. Bears' next near-term downside price breakout objective is pushing prices below solid longer-term technical support at 1,050.00. First resistance is seen at $1,073.70 and then at $1,080.00. First support is seen at today’s contract low of $1,062.40 and then at $1,060.00. Wyckoff’s Market Rating: 1.0

March silver futures prices closed near mid-range and hit another 11-week low today. The silver market bears have the solid overall near-term technical advantage. Prices are in a steep three-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $14.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the August low of $14.005. First resistance is seen at $14.28 and then at this week’s high of $14.44. Next support is seen at $14.005 and then at $13.75. Wyckoff's Market Rating: 1.0.

March N.Y. copper closed down 310 points at 208.05 cents today. Prices closed near the session low and hit another contract and six-year low today. The key “outside markets were again bearish for copper today as the U.S. dollar index was firmer and crude oil prices were weaker. Copper bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 225.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at today’s high of 210.95 cents and then at 213.60 cents. First support is seen at today’s contract low of 207.40 cents and then at 205.00 cents. Wyckoff's Market Rating: 1.0.

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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