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Gold Prices Pull Back A Bit Ahead of FOMC

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(Kitco News) - Gold prices are modestly lower in early morning U.S. trading Wednesday, on a corrective pullback from recent gains and some position-squaring by the shorter-term futures trades ahead of this afternoon’s FOMC statement. August gold futures were last down $3.60 an ounce at 1,346.90. July Comex silver prices were last down $0.038 at $14.955 an ounce.

Focus of the world marketplace at mid-week is squarely on the Federal Open Market Committee (FOMC) meeting that began Tuesday morning ends this afternoon with a statement. The majority of Fed watchers believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. However, a few do think the Fed will move to lower U.S. interest rates today. Look for more active trading in many markets in the immediate aftermath of the 2:00 p.m. EDT FOMC statement.

The Bank of England and Bank of Japan also hold their regular monetary policy meetings this week.

European stock indexes were mostly weaker overnight, while Asian shares were mostly up. Asian investors were encouraged by a tweet from President Trump on Tuesday that said he and Chinese President Xi had a good telephone conversation and they will meet at next week’s G-20 conference in Japan. The U.S. stock indexes are pointed toward steady to slightly lower openings when the New York day session begins, following strong gains Tuesday that put the bulls back in good shape to challenge or even surpass this year’s record highs.

Geopolitics is still not far from the front burner of the marketplace. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation could very quickly escalate and is not just going to fade away.

The key “outside markets” today see Nymex crude oil prices near steady and trading just below $54.00 a barrel. Meantime, the U.S. dollar index is a bit weaker on a corrective pullback from recent good gains. 

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage. Prices are in a choppy, seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at last week’s high of $1,362.20. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at last week’s low of $1,323.60. First resistance is seen at today’s high of $1,351.10 and then at this week’s high of $1,358.50. First support is seen at the overnight low of $1,344.80 and then at this week’s low of $1,336.60. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bears have the overall near-term technical advantage. However, prices are in a three-week-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.15 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $14.265. First resistance is seen at the overnight high of $15.015 and then at this week’s high of $15.08. Next support is seen at this week’s low of $14.755 and then at last week’s low of $14.625. Wyckoff's Market Rating: 4.0.

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