"Higher for longer" Fed punishes precious metals
(Kitco News) - Gold and silver prices are sharply down in midday U.S. trading Thursday, in the aftermath of the two-day FOMC meeting that produced an even more hawkish tone on U.S. monetary policy than the marketplace had expected. That's bearish for raw commodity markets, including the metals. December gold was last down $29.60 at $1,937.60 and December silver was down $0.271 at $23.565.
The marketplace Thursday reacted to the more hawkish tone of the FOMC meeting and press conference from Fed Chairman Powell. Barrons in an article today said, "The central bank succeeded in shifting the focus from anticipation over the timing of the first rate cuts to realization and acceptance that rates will remain higher for longer."
Said analyst Ed Moya from OANDA: "U.S. stocks dropped and king dollar returned after the Fed kept rates unchanged and signaled one more rate hike will happen this year. The U.S. economy is too strong and this rate-hiking cycle will last a lot longer than Wall Street wants. It is clear that higher-for-longer will be the Fed's theme for a while…. If we continue to see an extended period of time that the economy performs well, the growth/inflation mix will lead to a harder-hitting lag from their rate-hiking cycle."
The Bank of England held its regular monetary policy meeting today and kept its interest rates unchanged, as expected. Meantime, Switzerland's central bank also held its rates steady after a string of rate hikes.
|Gold shining against Swiss franc and British pound as both central banks leave rates unchanged|
The key outside markets today see the U.S. dollar index higher but down from its daily high. Nymex crude oil prices are firmer and trading around $90.25 a barrel. The benchmark U.S. Treasury 10-year note yield is presently at a multi-year high and fetching 4.482%.
Technically, December gold futures bears have the firm overall near-term technical advantage and gained fresh power today. A four-month-old downtrend is in place on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at today's high of $1,952.20 and then at this week's high of $1,968.90. First support is seen at today's low of $1,933.10 and then at the September low of $1,921.70. Wyckoff's Market Rating: 2.5.
December silver futures bears have the overall near-term technical advantage. However, there are now solid technical support levels just below the market that begin to suggest a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the September low of $22.555. First resistance is seen at this week's high of $23.88 and then at $24.00. Next support is seen at today's low of $23.06 and then at $23.00. Wyckoff's Market Rating: 4.0.
December N.Y. copper closed down 895 points at 368.65 cents today. Prices closed near mid-range today and hit a four-month low. The copper bears have the solid overall near-term technical advantage. Prices are in a choppy, seven-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 385.15 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 358.60 cents. First resistance is seen at today's high of 374.70 cents and then at Wednesday's high of 378.95 cents. First support is seen at today's low of 363.40 cents and then at 360.00 cents. Wyckoff's Market Rating: 3.0.