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Gold, Silver Prices Smacked By Not-So-Easy Fed

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(Kitco News) - Gold and silver markets have been hit hard by Wednesday afternoon’s Federal Reserve Open Market Committee (FOMC) statement and the ensuing press conference from Fed Chairman Jerome Powell. While the Fed cut U.S. interest rates, Powell was not as dovish as many metals bulls had hoped. December gold futures were last down $22.00 an ounce at 1,416.00. September Comex silver prices were last down $0.415 at $15.99 an ounce. The big difference between the cash and futures daily price changes today is due to the fact futures markets had closed and officially settled before the 2:00 p.m. FOMC statement was released Wednesday.

Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and Fed Chairman Powell press conference. The FOMC cut its main interest rate, the "fed funds rate" by 0.25%, to a range of 2% to 2.25%, as expected. A few did look for a bigger 0.5% rate cut. This was the first rate decrease by the Federal Reserve in 11 years. The FOMC statement said the rate cut was enacted due to very low inflation pressures and concerns about global economic growth. While the FOMC statement suggested the door is opened to more interest rate reductions in the months ahead, Powell took the marketplace aback when he said the Fed is not planning a long series of U.S. interest rate reductions. He added that this week’s interest rate cut was a “mid-cycle” adjustment. That spooked the metals, and stock and financial markets. The U.S. dollar index rallied solidly to a new high for the year and is seeing follow-through upside action today.

Asian and European stocks were mixed to weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

U.S. Treasuries are also weaker Thursday on the apparent less-easy lean on monetary policy from the Federal Reserve.

Traders are now awaiting Friday’s U.S. employment situation report for July, arguably the most important monthly report for the U.S. economy. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

The other key “outside market” today sees Nymex crude oil prices lower and trading just below $58.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. manufacturing PMI, the ISM manufacturing report on business, the global manufacturing PMI, domestic auto sales, and construction spending.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls still have the overall near-term technical advantage but have faded late this week. A two-month-old uptrend is still in place on the daily bar chart, but the bulls need to show fresh power soon to keep it alive. 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 $1,425.00 and then at today’s high of $1,428.60. First support is seen at the overnight low of $1,414.50 and then at $1,410.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bulls have the overall near-term technical advantage but have faded badly late this week and need to step up and show fresh power soon. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the July high of $16.685 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 $16.20 and then at $16.25. Next support is seen at the overnight low of $15.935 and then at $16.75. 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.