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Gold Prices Weaken In Wake Of FOMC Rate Hike

Kitco News

(Kitco News) - Gold prices lost their early gains that pushed prices to a five-month high of $1,262.20, and are trading moderately lower and at their daily lows in early-afternoon U.S. trading Wednesday. Gold lost altitude in the immediate aftermath of an increase in U.S. interest rates by the Federal Reserve, which was generally expected but maybe not as dovish as many had hoped. February gold futures were last down $4.40 an ounce at $1,249.60. March Comex silver was up $0.009 at $14.71 an ounce.

The U.S. Federal Reserve’s Open Market Committee (FOMC) raised U.S. interest rates by 0.25%, which was generally expected, but with some unusual uncertainty following President Trump’s admonishment of the Fed this week that it should not raise rates. The FOMC statement said the Fed will likely raise interest rates two times in 2019. While the Fed statement was a bit more dovish than recent FOMC statements, the marketplace deemed it as not dovish enough, which prompted gold and the U.S. stock market to back down a bit. Now, traders are awaiting Fed Chairman Powell’s press conference, to begin soon.

The key outside markets today see the U.S. dollar index lower on a further corrective pullback after hitting a nearly two-year high last week. The greenback saw little initial reaction to the FOMC statement.

Meantime, raw commodity sector leader Nymex crude oil prices are firmer on tepid short covering after careening to a 15-month low of $45.79 a barrel on Tuesday. There are still no early chart clues the crude oil market is near a bottom.

It now appears less likely, but not entirely out of the question, the U.S. government will shut down Friday, as reports say the Trump administration is likely to come to an agreement with Congress on a budget.

A heavy slate of U.S. economic data is also due out late this week, including the first estimate of third-quarter gross domestic product on Friday morning.

Live 24 hours gold chart [Kitco Inc.]

Technically, gold bulls have the overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at today’s high of $1,262.20. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,230.00. First resistance is seen at $1,256.60 and then at $1,262.20. First support is seen at today’s low of $1,247.90 and then at this week’s low of $1,239.40. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bears still have the overall near-term technical advantage. However, a choppy five-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the October high of $15.055 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $13.985. First resistance is seen at last week’s and today’s high of $14.90 and then at $15.00. Next support is seen at last week’s low of $14.56 and then at $14.28. Wyckoff's Market Rating: 3.5.

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.