Solid price gains in gold, silver, amid easy Fed, stimulus hopes
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(Kitco News) - Gold and silver futures prices are sharply higher in early U.S. trading Wednesday. Gold prices scored a four-week high and silver a five-week high. The precious metals bulls are stoked by a reaffirmed easy money policy from the Federal Reserve and rising hopes of a new stimulus package for Americans. On this day the metals bulls have cast aside the better risk appetite in the marketplace. February gold futures were last up $27.00 at $1,886.00 and March Comex silver was last up $1.023 at $26.075 an ounce.
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings and new record highs when the New York day session begins. Trader and investor risk sentiment remains keener this week, following a friendly FOMC meeting and ideas that the U.S. Congress is moving closer to agreement on a financial stimulus package for Americans. And hopes are higher this week that the U.K. and the European Union can come to agreement on a “smooth Brexit.”
The Federal Reserve’s Open Market Committee (FOMC) meeting that ended Wednesday afternoon saw the Fed leave U.S. interest rates unchanged, as expected. The FOMC statement also said there will likely be no change in U.S. interest rates until at least 2023. The Fed upgraded its U.S. economic growth and employment estimates. Meanwhile, the Fed will keep buying at least $120 billion of bonds per month until “substantial further progress has been made toward the committee’s maximum employment and price stability goals.” That marks a subtle change from previous Fed wording that said purchases will continue over the “coming months.” The marketplace deemed the FOMC results as upbeat and just a bit more dovish on monetary policy than expected.
In overnight news, the Euro zone consumer price index for November came in at down 0.3% from October and also down 0.3%, year-on-year. Major global economies are not experiencing any rising inflation concerns. If anything, there are more deflation concerns in the here and now. Still, the “reflation trade” is being embraced by those market watchers, including metals traders, that reckon all the record-breaking central bank and government stimulus measures this year will stoke problematic price inflation down the road.
The U.S. dollar index is solidly lower early today and hit another 2.5-year low overnight. The other important outside market sees January Nymex crude oil futures prices slightly higher and trading around $48.00 a barrel. These two markets are in a bullish daily posture for the precious metals. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.925%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction and the Kansas City Fed manufacturing survey.
Technically, the February gold futures bulls have regained the overall near-term technical advantage and have started a fledgling price uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,820.00. First resistance is seen at $1,890.00 and then at $1,900.00. First support is seen at $1,875.00 and then at the overnight low of $1,865.90. Wyckoff's Market Rating: 6.0
March silver futures bulls have the overall near-term technical advantage and have started a near-term price uptrend on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the November high of $26.27 an ounce. The next downside price objective for the bears is closing prices below solid support at $24.00. First resistance is seen at $26.27 and then at $26.50. Next support is seen at the overnight low of $25.335 and then at $25.00. Wyckoff's Market Rating: 6.5.