Gold Prices Steady, Awaiting P.M. Fed Decision
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(Kitco News) - Gold prices are trading near unchanged in early U.S. dealings Wednesday, ahead of this afternoon’s highly anticipated conclusion of the Federal Reserve’s Open Market Committee (FOMC) meeting. The precious metals bulls are expecting good news to come their way in the form of a U.S. interest rate cut. October gold futures were last up $0.40 an ounce at 1,435.50. September Comex silver prices were last down $0.098 at $16.46 an ounce.
The main economic event of the week will see the FOMC issue its statement on U.S. monetary policy at 2:00 P.M. EST. The Fed is expected to lower interest rates. Most market watchers think a 0.25% interest rate reduction is in the cards, but a few do look for a bigger 0.5% rate cut.
The just-released ADP national employment report showed a rise of 156,000 workers in July, which was close to being in line with market expectations. On Friday the more important U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.
Asian and European stocks were steady to weaker overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Global equities traders and investors have been taken back a bit this week by the apparent setback in the U.S.-China trade negotiations, which resumed at a high level this week in Shanghai.
The Euro zone gross domestic product in the second quarter was released today and came in at up 0.2% from the first quarter and up 1.1%, year-on-year. Those numbers were about in line with market expectations.
In other overnight news, Germany auctioned its 10-year bond (bund) for a record low average yield of -0.41%. The results reflect two important factors: still-very-low inflation in the major economies of the world, and European investors’ worries about the health of the European Union economy.
The key “outside markets” today see Nymex crude oil prices higher and trading around $58.50 a barrel. The U.S. dollar index is slightly up and not too far below the new high for the year hit on Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the employment cost index, the Treasury quarterly refunding announcement, the ISM Chicago business survey, and the DOE liquid energy stocks report.
Technically, the gold bulls still have the solid overall near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at the July high of $1,460.30. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,400.00. First resistance is seen at last week’s high of $1,440.60 and then at $1,447.00. First support is seen at Tuesday’s low of $1,429.00 and then at $1,425.00. Wyckoff's Market Rating: 7.0
September silver futures bulls have the solid overall near-term technical advantage. 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 $15.625. First resistance is seen at this week’s high of $16.64 and then at the July high of $16.685. Next support is seen at $16.345 and then at last week’s low of $16.195. Wyckoff's Market Rating: 7.5.