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Strong price gains in gold, silver as Federal Reserve leans less hawkish

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(Kitco News) - Gold and silver prices are posting solid gains in early U.S. trading Thursday. It appears the marketplace is breathing a sigh of relief following the Federal Reserve's FOMC meeting Wednesday afternoon that did not lean as hawkish on U.S. monetary policy as many market watchers had feared. June gold futures were last up $30.90 at $1,899.90 and May Comex silver was last up $0.583 at $22.95 an ounce.

Traders Thursday are still digesting the Federal Reserve move Wednesday afternoon to raise its key interest rate, the Fed funds rate, by 0.5%, which was expected by the marketplace. The rate hike is the first 0.5% increase in 22 years and comes amid the highest U.S. inflation levels in 40 years. The FOMC statement said the Fed will continue to raise interest rates as appropriate. At Fed Chairman Jerome Powell's press conference, the Fed chief said inflation levels are “much too high” and are presently spreading in the economy but are likely to stabilize soon. However, Powell added that he does not see inflation declining any time soon. Importantly, Powell said the U.S. central bank is not considering 0.75% rate increase increments. He did say 0.5% rate increases are on the table for the next two meetings. On the positive side, Powell said the U.S. economy is strong and well positioned to handle the upcoming Fed interest rate increases. The marketplace's read on the statement was dovish on U.S. monetary policy. Others might argue the FOMC statement and Powell's remarks were just less hawkish than previous recent remarks from Federal Reserve officials.

Global stock markets were mixed overnight, with European shares mostly up and Asian shares mostly down. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on corrective pullbacks after strong gains posted Wednesday afternoon. U.S. stock indexes Wednesday afternoon soared on the Fed news, gold posted solid gains and bitcoin and crypto currencies rallied sharply, too. However, the U.S. stock indexes have quickly lost their sizzle as many market watchers reckon not much has really changed regarding overall Fed policy.

Gold and bitcoin jump as Fed's Powell takes 75bps hike off the table in June

The Bank of England is at its regular monetary policy meeting raised its interest rate by 0.25%. The BOE raised its annual inflation forecast significantly, to 10.25%. A rate hike was expected but the inflation forecast was a surprise on the upside.

Traders and investors are now awaiting Friday morning's U.S. employment situation report for April. The key non-farm jobs number in the report is expected to come in at up 400,000, which compares to a rise of 431,000 in the March report.

The key outside markets today sees Nymex crude oil futures prices up and trading around $109.50 a barrel. Meantime, the U.S. dollar index is solidly higher in early trading after selling off Tuesday afternoon. The yield on the 10-year U.S. Treasury note is presently fetching 2.966%. The 10-year yield early this week briefly hit a 3.5-year high just above 3%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the global services PMI, and monthly chain store sales data.

Live 24 hours gold chart [Kitco Inc.]

Technically, the June gold futures bears have the overall near-term technical advantage, but the bulls have gained some momentum late this week. A downtrend line is still in place on the daily bar chart. Bulls' next upside price objective is to produce a close in April futures above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week's low of $1,849.70. First resistance is seen at  $1,915.00 and then at $1,921.30. First support is seen at the overnight low of $1,882.80 and then Wednesday's low of $1,861.10. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

May silver futures bears have the solid overall near-term technical advantage. Prices are trending sharply down on the daily bar chart. 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 $22.00. First resistance is seen at today's high of $23.12 and then at $23.50. Next support is seen at $22.50 and then at $22.315. 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.