Gold, silver see price gains as FOMC projects gradual tapering
(Kitco News) - Gold and silver prices are solidly higher in early U.S. dealings Thursday. The precious metals bulls are deeming Wednesday afternoon’s FOMC conclusion as market-friendly. However, fresh U.S. data lies just ahead this morning that could move the markets. August gold futures were last up $26.40 at $1,826.10 and September Comex silver was last up $0.753 at $25.625 an ounce.
Traders and investors are still digesting Wednesday afternoon’s conclusion of the meeting of the Federal Reserve’s Open Market Committee (FOMC), including a press conference from Fed Chair Jay Powell. After initially thinking the Fed was leaning less dovish, in the immediate aftermath of the FOMC statement, Powell’s press conference seemed to assuage the marketplace into thinking that while the Fed may start to taper its bond-buying program (quantitative easing) as soon as this year, due to a strengthening U.S. economy, the central bank will not be in a hurry to back off from its overall accommodative monetary policies. That rallied gold and silver prices, pressured the U.S. dollar index and kept U.S. Treasury bond yields near steady by the end of the day Wednesday.
Global stock markets were mixed but mostly higher overnight. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Market watchers are now focusing on the weekly U.S. jobless claims report and the latest reading on U.S. gross domestic product. The advance estimate for second-quarter GDP is seen up 8.4%, year-on-year. The closely watched PCE price index of the GDP data is seen up 3.7%, year-on-year.
The World Gold Council said global demand for gold has yet to recover from the pandemic. The WGC said gold demand during the first half of 2021 was the lowest since 2008. The April-to-June period saw global gold demand at 955.1 metric tons (MT), a reduction from 960.5 MT over the same period in 2020. The second quarter of 2019 saw demand of 1,132.1 MT. However, central banks bought more gold between April and June 2021 than any quarter for two years. ETFs also added considerable amounts of gold to their stockpiles in the second quarter of this year, said the WGC.
The key outside markets today see the U.S. dollar index lower in the wake of the FOMC meeting. Nymex crude oil futures prices are up and trading around $72.85 a barrel. The yield on the U.S. Treasury 10-year note is presently fetching 1.27%.
Other U.S. economic data due for release Thursday includes pending home sales.
Technically, gold futures bulls have regained the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $1,835.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,789.10. First resistance is seen at the overnight high of $1,827.90 and then at $1,835.00. First support is seen at the overnight low of $1,806.10 and then at $1,800.00. Wyckoff's Market Rating: 5.5.
The silver bears still have the overall near-term technical advantage. Prices are still in a 2.5-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at this week’s low of $24.515. First resistance is seen at $25.805 and then at $26.00. Next support is seen at $25.25 and then at the overnight low of $25.00. Wyckoff's Market Rating: 3.5.