(Kitco News) - Gold prices are higher and hit daily highs in early-afternoon U.S. trading Wednesday, in the immediate aftermath of the first U.S. central bank interest rate cut in 4.5 years. December gold was last up $14.50 at $2,606.60 and December silver was up $0.06 at $31.06.
The just-released Federal Reserve Open Market Committee meeting (FOMC) statement shows the U.S. central bank reduced its main interest rate—the Fed funds rate—by a more aggressive 0.5%, to a range of 4.75% to 5.0%. About half of the marketplace expected a smaller 0.25% cut. The FOMC statement said the U.S. economy has made progress on lowering inflation but it remains elevated.
Markets are now anxiously awaiting the press conference and comments from Fed Chairman Jerome Powell. The Bank of England and the Bank of Japan hold their regular monetary policy meetings Thursday.
It’s somewhat surprising the gold and silver markets are not seeing stronger safe-haven bidding today, after the simultaneous exploding on Tuesday of thousands of pagers in Lebanon used by Hezbollah militia members, including an Iranian official. Then today, many walkie-talkies used by Hezbollah also exploded, injuring at least 100 people and killing at least one. Israel is widely blamed for the elaborate scheme, which will likely prompt a miliary response from Hezbollah.
The key outside markets today see the U.S. dollar index solidly lower and sold off after the more aggressive Fed rate cut. Nymex crude oil prices are near steady and trading around $71.00 a barrel. The benchmark 10-year U.S. Treasury note yield is on the decline and is presently fetching 3.681%, not much change from before the FOMC statement.
Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,500.00. First resistance is seen at the record high of $2,617.40 and then at $2,625.00. First support is seen at $2,600.00 and then at this week’s low of $2,587.30. Wyckoff's Market Rating: 9.5.
December silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $32.46. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at this week’s high of $31.46 and then at $32.00. Next support is seen at today’s low of $30.565 and then at $30.00. Wyckoff's Market Rating: 6.5.
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