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Gold prices weaker as Federal Reserve not so easy

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(Kitco News) - Gold and silver prices are weaker in afternoon U.S. trading Wednesday, in the wake of the just-released FOMC statement that did not lean as accommodative on U.S. monetary policy as many expected. December gold futures were last down $2.50 an ounce at 1,510.50. December Comex silver prices were last down $0.27 at $17.88 an ounce.

The big U.S. economic event this week saw the just-concluded Federal Reserve’s Open Market Committee (FOMC) cut U.S. interest rates (the “Fed funds” rate) by 0.25%, to 1.75% to 2%. The move was expected by the marketplace. However, the FOMC members were split on the move, voting 7 to 3 in favor of the cut. Seven of 17 FOMC members expect just one more interest rate cut this year. The FOMC statement also said the U.S. economy continues to expand but uncertainties remain on the global economic outlook. The marketplace deemed the FOMC statement as not so easy on U.S. monetary policy as many had expected, despite the rate cut. The U.S. dollar index rallied moderately on the rate reduction, while the U.S. stock market saw some selling pressure.

At mid-week the marketplace is not as anxious as earlier this week, in the wake of the weekend terrorist attack on Saudi oil installations. Still, traders and investors are wondering when “the next shoe will drop” on this matter.

After a spike up in very short term lending rates on Tuesday, the overnight rates returned to normal levels Wednesday, after the Federal Reserve injected liquidity into the financial system. While some traders and institutions were rattled by the matter, the overall marketplace was not impacted. Still, some market watchers wonder if this development has more important, and possibly dire, implications down the road.

Nymex crude oil prices are lower and trading around $58.00 a barrel. Reports at mid-week said the damaged Saudi oil installations will be back on line much sooner than expected—by the end of this month.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures bulls still have the solid overall near-term technical advantage and are keeping in place a 3.5-month-old uptrend on the daily bar chart. However, the bulls need to show fresh power soon to keep the price uptrend alive. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the September high of $1,566.20. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,485.00. First resistance is seen at this week’s high of $1,519.70 and then at $1,525.00. First support is seen at $1,500.00 and then at the September low of $1,492.10. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the overall near-term technical advantage. A 3.5-month-old uptrend is still in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $19.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at this week’s high of $18.17 and then at last week’s high of $18.555. Next support is seen at today’s low of $17.65 and then at last week’s low of $17.47. Wyckoff's Market Rating: 6.5.

December N.Y. copper closed down 130 points at 261.40 cents today. Prices closed nearer the session low today. The copper bears have the overall near-term technical advantage. However, recent gains suggest this market has put in a bottom. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 275.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the September low of 248.20 cents. First resistance is seen at Tuesday’s high of 264.75 cents and then at 268.00 cents. First support is seen at today’s low of 260.35 cents and then at last week’s low of 259.00 cents. Wyckoff's Market Rating: 3.0.

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.