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Gold Weaker On Corrective Pullback From Good Gains Tuesday; Fed A Nonevent

(Kitco News) - Gold prices ended the U.S. day session just slightly lower, on a downside technical correction after good gains Tuesday. The gold market did uptick just a bit following the afternoon release of the FOMC statement. April Comex gold was last down $1.50 an ounce at $1,209.90. March Comex silver was last down $0.013 at $17.53 an ounce.

Live 24 hours gold chart [Kitco Inc.]

It was a very busy data day for the U.S. markets Wednesday. The Federal Reserve’s FOMC meeting ended Wednesday afternoon with a statement. There was no change in U.S. interest rates or monetary policy, as expected. However, the Fed did express a bit of concern about rising inflationary price pressures. History shows that rising inflation generally benefits hard assets like gold and silver.

Earlier Wednesday, the U.S. ADP national employment report for January showed a big miss to the upside of expectations, at a gain of 246,000. That’s about 80,000 above the consensus forecast. Gold prices had been trading slightly higher just before the ADP report was released and then backed down below unchanged after the report.

The January ISM report released at mid-morning came out at 56.0 versus 54.5 in December. A reading of 55.0 for January was expected. Gold prices were already feeling some pressure after a much-higher-than-expected U.S. ADP national employment report number was released and fell to the session lows after the ISM report.

The U.S. dollar index was higher Wednesday, after dropping to a six-week low on Tuesday. The ADP and ISM reports gave the dollar a boost, which in turn also helped to pressure gold and silver prices. However, President Trump made comments Tuesday that suggested he wants to see a depreciating greenback on world currency markets.

The other key “outside market” on Wednesday saw Nymex crude oil prices firmer. After one-month of curtailing its collective crude oil output, the OPEC oil cartel has appeared to help stabilize world oil prices, which are trading between $50 and $55 a barrel in Nymex futures.

Traders are looking ahead to Friday’s U.S. employment report for January from the Labor Department. The key non-farm payrolls number of the report is expected to come in at up 175,000. However, with the stronger ADP report, the more important Friday jobs number could come in stronger than the present forecasts.

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Technically, April gold futures prices closed near mid-range on a technical pullback from the good gains scored Tuesday. The gold bears have the overall near-term technical advantage, but the bulls gained a bit of upside momentum earlier this week. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,223.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,182.60. First resistance is seen at this week’s high of $1,217.40 and then at $1,223.00. First support is seen at $1,200.00 and then at Tuesday’s low of $1,195.60. Wyckoff's Market Rating: 3.5.

March silver futures prices closed near mid-range on a corrective pullback after hitting a 2.5-month high on Tuesday. The silver market bulls and bears are on a level overall near-term technical playing field. However, the bulls have some momentum on their side. Prices are in a six-week-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at this week’s high of $17.635 and then at $17.75. Next support is seen at $17.36 and then at today’s low of $17.105. Wyckoff's Market Rating: 5.0.

March N.Y. copper closed down 120 points at 271.60 cents today. Prices closed nearer the session low on a corrective pullback from Tuesday’s solid gains. Prices early on today did hit a nine-week high. The copper bulls still have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 275.30 cents. The next downside price objective for the bears is closing prices below solid technical support at 255.00 cents. First resistance is seen at 275.30 cents and then at 277.50 cents. First support is seen at 270.00 cents and then at today’s low of 265.95 cents. Wyckoff's Market Rating: 7.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow Jim Wyckoff @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 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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