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Gold, silver sell off as FOMC conclusion looms

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(Kitco News) - Gold and silver prices are lower in midday dealings Tuesday, losing initial gains that were seen following a U.S. inflation report that came in very close to market expectations. Position evening ahead of Wednesday afternoon’s FOMC meeting conclusion is featured. Futures traders with weak long positions were also featured sellers. A lower U.S. dollar index and higher crude oil prices did limit the downside in gold and silver today. August gold was last down $10.70 at $1,959.00 and July silver was down $0.20 at $23.85.

Today’s U.S. consumer price index report for May showed a rise of 4.0%, year-on-year, the same as in the April report and right in line with market expectations. Other internals of the CPI report also came in about as expected. The marketplace is a bit upbeat on the CPI numbers, as they were not a negative surprise on the U.S. inflation front. Wednesday morning’s U.S. producer price index report for May is seen down 0.1%, month-on-month.

Global stock markets were mostly higher overnight. U.S. stock indexes are higher at midday.

In overnight news, China’s central bank eased its monetary policy by trimming a key lending rate. The central bank cut its seven-day reverse repurchase operations to 1.9% from 2.0%. This latest move is a further attempt by the Chinese government to boost Chinese economic growth, which is slowing.

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The U.S. data point of the week is the FOMC meeting of the Federal Reserve, which begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. A majority of the marketplace still thinks the Fed will pause in its interest-rate-tightening cycle. Today’s as-expected CPI report falls into the camp of those expecting the Fed to pause at this week’s FOMC meeting.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $1,949.60. First resistance is seen at last week’s high of $1,987.80 and then at $2,000.00. First support is seen at the May low of $1,949.60 and then at $1,940.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the May low of $22.785. First resistance is seen at last week’s high of $24.62 and then at $25.00. Next support is seen at $23.50 and then at $23.00. Wyckoff's Market Rating: 6.5.

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.