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Price pressure on gold, silver as Fed signals "higher for longer"

Kitco News

(Kitco News) - Gold and silver prices are sharply down in early U.S. trading Thursday, in the aftermath of the two-day FOMC meeting that concluded Wednesday afternoon with a more hawkish tone than the marketplace was expecting. December gold was last down $27.20 at $1,939.90 and December silver was down $0.401 at $23.435.

The marketplace Thursday is reacting to the hawkish tone of the FOMC meeting of the Federal Reserve Wednesday afternoon, including a 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.

Asian and European stocks were mostly lower overnight. U.S. stock indexes are pointed to solidly lower openings when the New York day session begins.

Gold prices holding around $1,950 as Powell remains hawkish, but markets see no more rate hikes

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are weaker and trading around $89.25 a barrel. The benchmark U.S. Treasury 10-year note yield is presently at a multi-year high and fetching 4.462%. These markets are firmly bearish for the precious metals markets on this day.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, existing home sales and leading economic indicators.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bears have the firm overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the September high of $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 the overnight high of $1,952.20 and then at this week’s high of $1,968.90. First support is seen at $1,931.20 and then at the September low of $1,921.70. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage. However, there are stiff technical support layers just below the market that may well halt the decline. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at this week’s high of $23.88 and then at $24.00. Next support is seen at this week’s low of $23.235 and then at $23.00. Wyckoff's Market Rating: 3.5.

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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.