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Gold Sells Off After Hawkish FOMC Minutes

Kitco News

(Kitco News) - Gold prices were moderately lower and hit new daily lows in early afternoon action Wednesday, in the wake of a hawkish FOMC minutes report. Some normal profit taking by the shorter-term futures traders was featured, after recent good gains in gold and silver. The markets in earlier U.S. trading were in pause modes after gold hit a 3.5-month high overnight. Silver prices scored a five-week high today. February Comex gold was last down $6.30 an ounce at $1,309.80. March Comex silver was last down $0.086 at $17.12 an ounce.

The U.S. economic highlight Wednesday was the release of the minutes of the last Federal Open Market Committee (FOMC) meeting held on Dec. 12-13. Traders parsed the statement for clues on the direction and timing of U.S. monetary policy in 2018—and deemed the minutes as favoring the hawkish camp on U.S. monetary policy. The members are still seeking a gradual rise in U.S. interest rates, with some members saying the new U.S. tax policy could raise GDP. Gold prices sold off after the minutes were released at 2:00 p.m. EST. Other markets did not see such significant reactions to the minutes.

World stock markets were mostly firmer Wednesday. U.S. stock indexes were higher and hit record highs today. Such did somewhat limit the upside in the gold and silver markets. Still, the ability of gold and silver prices to rally while the competing equities asset class is also rising, is impressive from the metals bulls’ perspective.

Tensions in Iran are still on the front burner of the market place. Demonstrators in that country are demanding an overthrow of the ruling government. Several protesters have been killed and the situation is not improving, according to reports. This matter is supporting the safe-haven gold and silver markets, as well as the crude oil market.

The key outside markets on Wednesday saw the U.S. dollar index higher on a corrective bounce from recent strong selling pressure. Meantime, Nymex crude oil prices were solidly higher and hit another 2.5-year high above $61.00 a barrel. The Iran demonstrations are supporting the oil market.

Live 24 hours gold chart [Kitco Inc.]

Technically, February gold futures prices closed near mid-range today. The bulls have the overall near-term technical advantage, amid a steep three-week-old uptrend being in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,280.00. First resistance is seen at today’s high of $1,323.00 and then at $1,225.00. First support is seen at this week’s low of $1,304.60 and then at $1,300.00. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures prices closed nearer the session high today. The bulls have the slight overall near-term technical advantage. Prices are in a steep three-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 the October low of $16.435. First resistance is seen at $17.37 and then at $17.50. Next support is seen at this week’s low of $16.985 and then at $16.75. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed down 195 points at 325.90 cents today. Prices closed near mid-range on profit taking after hitting a contract high last week. 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 340.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 310.00 cents. First resistance is seen at today’s high of 328.00 cents and then at the contract high of 332.20 cents. First support is seen at today’s low of 323.65 cents and then at 320.00 cents. Wyckoff's Market Rating: 8.0.

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.