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Gold loses post-FOMC price gains as Powell upbeat on U.S. economy

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(Kitco News) - Gold prices are lower and near daily lows in afternoon U.S. trading Wednesday. This afternoon’s statement from the Federal Reserve’s Open Market Committee (FOMC) was deemed mostly neutral on U.S. monetary policy and actually rallied the gold market, initially. However, Fed Chairman Jerome Powell’s upbeat remarks on the U.S. economy and jobs-growth prospects dented the gold bulls’ enthusiasm as the U.S. dollar index rallied to its daily high while Powell was giving his press conference. October gold futures were last down $6.60 at $1,769.50. December Comex silver was last up $0.054 at $22.665 an ounce.

The FOMC statement said the U.S. economy continues to recover from the pandemic, but the rise in Covid cases has slowed the recovery. The statement said that a tapering of the central bank’s bond-buying program (quantitative easing) is on the table for discussion. The statement also said a U.S. rate hike is likely in 2022. The Fed said the 2021 inflation forecast is 4.2% and that inflation will remain above the Fed’s target rate of 2.0% until 2024.

Global stock markets were mixed in overnight trading. The U.S. stock indexes are solidly higher in afternoon trading. There is less risk aversion in the global marketplace at mid-week. The troubled Chinese property giant, Evergrande, is still on traders’ and investors’ minds, but many believe the situation will not turn into a worldwide contagion and that the Chinese government will not let Evergrande fail. The company said it would make its latest debt payments—at least one of them anyway. The marketplace will continue to keep a close eye on the matter. China’s markets reopened today after a public holiday, with the Chinese stock market a bit weaker but not showing any stress.

Just over the horizon, the U.S. government is now grappling with extending the U.S. debt ceiling. Treasury Secretary Janet Yellen said the government will run out of money sometime in October. The marketplace has seen this situation play out in years past, and it could inject some anxiety into the marketplace if the government actually nears a shutdown.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil futures prices are higher and trading around $72.00 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.309%. 

Live 24 hours gold chart [Kitco Inc.]

Technically, gold bears still have the slight overall near-term technical advantage but the bulls are having a good week and have some momentum. A three-week-old price downtrend is still in place on the daily bar chart, but now just barely. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,790.00 and then at $1,800.00. First support is seen at today’s low of $1,762.80 and then at Tuesday’s low of $1,756.30. Wyckoff's Market Rating: 4.5

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures saw short covering was featured after prices hit a 14-month low earlier this week. The silver bears still have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $23.25 and then at $23.50. Next support is seen at today’s low of $22.455 and then at this week’s low of $22.025. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed up 1,410 points at 426.60 cents today. Prices closed near the session high today. The copper bulls and bears are back on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 447.15 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 396.65 cents. First resistance is seen at 430.00 cents and then at 435.00 cents. First support is seen at 420.00 cents and then at today’s low of 410.70 cents. Wyckoff's Market Rating: 5.0.

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.