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Some price strength in gold, silver ahead of FOMC results

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(Kitco News) - Gold and silver prices are modestly up in early morning U.S. trading Wednesday. Traders will remain tentative, however, ahead of the Wednesday afternoon conclusion of the Federal Reserve’s latest monetary policy meeting. August gold futures were last up $4.00 at $1,859.20 and July Comex silver was last up $0.227 at $27.915 an ounce.

The U.S. data point of the week sees the Federal Reserve’s FOMC meeting that began Tuesday morning ending Wednesday afternoon with a statement and new economic projections. While no major changes are expected for U.S. monetary policy, focus will be on the Fed’s tenor on inflation prospects and when the central bank will start to taper its very easy money policies. Fed officials recently have hinted they will begin discussing a timetable for reducing its bond-buying program (quantitative easing) sooner rather than later.

European stock markets were mostly flat overnight, with Asian shares a bit weaker. The marketplace is awaiting the conclusion of the Fed’s FOMC meeting this afternoon. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Record highs have been scored this week in the S&P 500 and Nasdaq stock index futures. The past several weeks have seen little risk aversion in the marketplace and that’s bullish for the global stock markets.   

Reports at mid-week say China is set to try to control inflated raw commodity prices. The government will intervene after copper, iron ore and coal prices rose to record highs recently. The state-owned Assets Supervision and Administration Commission (Sasac) ordered China’s businesses to control risks and limit their exposure to overseas commodity markets. Companies have been ordered to report their futures positions for Sasac. China also said its National Food and Strategic Reserves Administration will soon release stockpiles of metals including copper, aluminum and zinc. The metals will reportedly be sold directly to manufacturers. Copper futures prices have sold off sharply on the news.

China’s industrial output was reported up 8.8% in May, year-on-year, which was in line with market expectations.

In other overnight news, consumer prices in the U.K. rose 2.1% in in May, year-on-year--the highest level since July of 2019. The hot inflation number increased speculation about the timing of Bank of England tightening of its monetary policy.

Israeli warplanes carried out a series of strikes at Hamas militant sites in the Gaza Strip Wednesday, the first raids since a cease-fire ended the war with Hamas in May.

The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are up a bit and trading around $72.35 a barrel after hitting another 2.5-year high of $72.83 overnight. The key U.S. Treasury 10-year note yield is fetching 1.49%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, import and export prices, and the weekly DOE liquid energy stocks report. U.S. Treasury Secretary Yellen testifies to the Senate today on the Biden administration’s fiscal year 2022 budget.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls have the overall near-term technical advantage but are fading. A nine-week-old price uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,810.70. First resistance is seen at Tuesday’s high of $1,870.90 and then at this week’s high of $1,879.70. First support is seen at Tuesday’s low of $1,853.00 and then at this week’s low of $1,845.70. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage but trading has turned sideways and choppy recently. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at the May high of $28.90 an ounce. The next downside price objective for the bears is closing prices below solid support at $27.00. First resistance is seen at this week’s high of $28.16 and then at last week’s high of $28.445. Next support is seen at this week’s low of $27.485 and then at the June low of $27.09. 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.