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Gold, Silver Prices Pushed Up By Dovish Federal Reserve

Kitco News

(Kitco News) - Gold and silver prices are higher in early U.S. trading Thursday, and holding Wednesday afternoon’s solid gains. Gold has notched a nearly eight-month high, while silver prices pushed to six-month highs overnight. The precious metals markets are seeing buying support from a more dovish U.S. Federal Reserve. February gold futures were last up $12.40 an ounce at $1,322.30. March Comex silver was last up $0.188 at $16.115 an ounce. (Note that the futures markets are today incorporating Wednesday’s solid gains into today’s prices, as the official daily closes in gold and silver futures occurred before the big afternoon rallies.)

European and Asian stock markets were mostly higher overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins, following solid gains posted on Wednesday.

Traders and investors are still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that concluded Wednesday afternoon. The FOMC statement contained no monetary policy changes but the FOMC members said they will now be patient on future Fed rate hikes due to muted inflationary pressures and some concerns about global economic growth. The statement also suggested the Fed will not be in such a hurry to further reduce its balance sheet of U.S. securities. Fed Chairman Jerome Powell said at his press conference that “the case for raising U.S. interest rates has weakened somewhat.” While no change in monetary policy was expected, the FOMC statement was deemed fully dovish on U.S. monetary policy. The U.S. stock market rallied sharply, the U.S. dollar index sold off and gold prices also shot higher.

U.S. and China high-level trade officials are meeting in Washington, D.C, with today scheduled to conclude the meetings. There is no consensus at all on any progress that may or may not be made at this week’s talks. Markets will react to any significant announcements coming out of the meeting.

The next big economic data point is Friday’s U.S. jobs report for January from the Labor Department. The key non-farm payrolls number is forecast to come in at up 170,000 in the month. Wednesday’s U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000 and hints that the Friday non-farm jobs number could come in stronger than expected.

In overnight news, the Euro zone got some more downbeat economic data, as its GDP growth for 2018 was reported at 1.8% versus 2.4% in 2017. However, GDP growth in the fourth quarter was up a bit from that of the third quarter.

The outside markets today see the U.S. dollar index trading near steady following Wednesday’s selling pressure. Meantime, Nymex crude oil prices are slightly lower and trading around $54.00 a barrel.

U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the employment cost index, the ISM-Chicago business survey, and new residential sales.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage and have gained power this week. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,330.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,323.40 and then at $1,330.00. First support is seen at the overnight low of $1,316.70 and then at $1,310.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls have the near-term technical advantage and have momentum on their side. A 2.5-month-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 $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.50. First resistance is seen at $16.25 and then at $16.50. Next support is seen at $15.825 and then at this week’s low of $15.61. Wyckoff's Market Rating: 6.5.

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.