Gold, silver rally on safe-haven demand as central banks in focus
(Kitco News) - Gold and silver prices are solidly higher in early U.S. trading Wednesday, on safe-haven buying amide keener uncertainty in the marketplace. The U.S. Federal Reserve and the European Central bank are taking center stage at mid-week, amid problematic price inflation that could begin to more seriously impact global financial markets. August gold futures were last up $23.20 at $1,835.70. July Comex silver futures were last up $0.656 at $21.61 an ounce.
The U.S. data point of the week is the Federal Reserve’s FOMC meeting that began Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to raise U.S. interest rates by at least 0.5%, with many now leaning to a 0.75% rate hike. Fed Chairman Jerome Powell will hold a press conference after the FOMC meeting concludes Wednesday afternoon.
Also on the front burner of the marketplace at mid-week, today saw an emergency meeting of European Central Bank. The governing council will "discuss current market conditions," said a report. The worry for policymakers is the rapid repricing of euro-zone financial assets since last week's scheduled ECB meeting, which indicated an interest rate hike in July. Italy, Spain and Greece have seen their government bond yields spike, as those are the weaker economies in the Euro zone. The marketplace is a bit spooked that dislocations in European bond markets could spread into a contagion. That’s bullish for the safe-haven gold and silver markets.
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Trader and investor risk appetite is tepid at best at mid-week.
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The key outside markets today see Nymex crude oil prices lower and trading around $118.50 a barrel. The U.S. dollar index is lower in early trading. The yield on the 10-year U.S. Treasury note is fetching 3.39%.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, retail sales, the Empire State manufacturing survey, import and export prices, manufacturing and trade inventories, Treasury international capital data, and the weekly DOE liquid energy stocks report.
Technically, the August gold futures bears have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at this week’s high of $1,882.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at the overnight high of $1,837.60 and then at $1,850.00. First support is seen at $1,820.00 and then at this week’s low of $1,806.10. Wyckoff's Market Rating: 3.0
July silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $22.565 an ounce. The next downside price objective for the bears is closing prices below solid support at the May low of $20.42. First resistance is seen at the overnight high of $21.565 and then at $22.00. Next support is seen at $21.00 and then at this week’s low of $20.845. Wyckoff's Market Rating: 2.5.