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Mild price pressure on gold, silver ahead of Fed decision

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Welcome to Kitco News' 2023 Outlook Series. Uncertainty continues to dominate financial markets as central bank monetary policies push the global economy into a recession to cool down inflation. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2023.

(Kitco News) - Gold and silver prices are modestly lower in early U.S. trading Tuesday. Some more profit taking and position evening ahead of this week’s monetary policy decisions by major central banks are featured today. February gold was last down $4.60 at $1,918.20 and March silver was down $0.263 at $23.46.

The U.S. data point of the week is the Federal Reserve Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. Most believe the Fed will raise the key U.S. interest rate by 0.25%, following the recent 0.5% rate hikes. Trading in stock and financial markets may be more muted just ahead of the FOMC statement and press conference by Fed Chairman Jerome Powell Wednesday afternoon. The European Central Bank and Bank of England hold their monetary policy meetings Thursday.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward slightly firmer openings when the New York day session begins. The U.S. stock indexes are still in price uptrends on the daily bar charts and the stock index bulls have the overall near-term technical advantage.

In overnight news, China got some upbeat economic data Tuesday. Official readings on manufacturing and services improved sharply. The services purchasing managers’ index (PMI) rose to 54.0 in January from 39.4 in December. The manufacturing PMI rose to 54.4 from 41.6 in December. Readings above 50.0 suggest growth in the sector.

Gold is vulnerable to a pullback as Powell prepares to signal 'seriousness', but will hit an all-time high in 2023 - Adrian Day

Meantime, the Euro zone economy has avoided recession, but just barely. The fourth-quarter GDP for the zone came in at up 0.1% from the third quarter and up 1.9%, year-on-year. Those number were slightly better than market expectations.

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil futures prices are slightly down and trading around $77.50 a barrel. Oil traders are awaiting an OPEC-plus cartel meeting Wednesday. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching around 3.53%.   

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail indexes, the employment cost index, the U.S. monthly house price index, the S&P-Case Shiller-CoreLogic house indexes and the Chicago ISM business survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls still have the firm overall near-term technical advantage. However, a three-month-old uptrend on the daily bar chart is in some jeopardy. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,949.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at today’s high of $1,925.80 and then at this week’s high of $1,933.60. First support is seen at $1,900.00 and then at $1,890.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage. However, trading has been sideways and choppy for weeks. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at the January high of $24.775. 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 $23.78 and then at $24.00. Next support is seen at $23.00 and then at the January low of $22.845. Wyckoff's Market Rating: 6.0.

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.