(Kitco News) - Gold and silver prices are weaker in early U.S. trading Thursday, following a somewhat surprisingly hawkish tone on U.S. monetary policy that was struck be Federal Reserve Chairman Powell on Wednesday afternoon. December gold was last down $16.50 at $3,984.70. December silver prices were down $0.028 at $47.89.
The Federal Open Market Committee on Wednesday lowered the target range for the federal funds rate by 0.25%, as widely expected by the marketplace, with dissents in both directions. However, Powell warned that investors need to rein in expectations for a December U.S. interest rate cut, underscoring a growing tug-of-war among U.S. monetary policy makers with differing outlooks for jobs and inflation. Powell made it clear that a follow-up rate cut in December is not a done deal, saying "a further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it." Powell’s hawkish tone sent U.S. Treasury prices falling (yields rising), making another Fed rate cut in December only moderately likely. “While Powell made it clear that the primary concern for some is a cooling job market, others inside the Fed are warning persistent inflation will limit room for more easing. And a freeze on the release of official economic data during the ongoing government shutdown is only hardening the divide,” said a Bloomberg report.
Global stock markets were mixed to weaker overnight, while U.S. stock indexes are pointed to slightly lower openings when the New York day session begins.
In overnight news, central banks continue to stock up on gold. Central banks accelerated gold purchases in the third quarter, with several returning buyers purchasing gold despite record-high prices to bet on bullion's value as a hedge against a vulnerable U.S. dollar. The World Gold Council reported central banks purchased 220 tons of gold in the July-September period, marking a 28% increase over the preceding quarter, and added 634 tons of bullion to their reserves in the year through September. The WGC forecast full-year purchases for 2025 within a range of 750 to 900 tons, citing heightened geopolitical tensions, stubborn inflationary pressures, and uncertainty around global trade policy as factors fueling appetite for safe-haven assets.
Presidents Trump and Xi Jinping agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark 90-minute summit meeting in South Korea today. Beijing will resume purchases of what Trump called “tremendous amounts” of U.S. soybeans, as well as sorghum and other U.S. farm products. The U.S. will cut by half fentanyl-related tariffs on Chinese goods. The U.S. will also extend a pause on some reciprocal tariffs on China for an additional year. The agreement includes China pausing sweeping controls on rare-earth magnets in exchange for the U.S. rolling back an expansion of restrictions on Chinese companies. Also, the two countries will work together on issues such as trade, energy and artificial intelligence. Today’s Trump-Xi meeting potentially stabilizes relations between the world’s two biggest economies after months of turmoil. After the summit, Trump said, “I guess, on the scale from zero to 10, with 10 being the best, I would say the meeting was at a 12,” he told reporters on Air Force One, which he boarded immediately after the meeting with Xi in Busan, South Korea. “You know, just the whole relationship is very, very important. I think it was very good,” said Trump and as reported by Bloomberg.
U.S. to restart nuclear weapons testing. President Trump on Wednesday said the U.S. will match its rivals in testing nuclear weapons after Russia announced trials of a nuclear-powered underwater drone and nuclear-capable cruise missile. Trump instructed the Department of War to start testing nuclear weapons on an equal basis, with the process to begin immediately, in response to Russia's accelerated testing of nuclear-capable super weapons, reported Bloomberg. The White House didn't immediately respond to a request for clarification over whether Trump was ordering tests of nuclear-powered weapons and those that can carry nuclear warheads, rather than nuclear detonations.
Trump, Canada Prime Minister Carney, have “very nice conversation.” President Trump today said he had a “very nice conversation” Wednesday with Canadian Prime Minister Mark Carney, despite the latest increase in trade tensions between the two neighboring nations. Trump made his remarks on Air Force One today after departing South Korea, where he had come for meetings of the Asia-Pacific Economic Cooperation group. Carney and Trump sat at the same table for an APEC dinner Wednesday. “I had a very nice conversation with him last night,” Trump told reporters. Carney’s office noted the encounter in a statement late Wednesday: “The Prime Minister had constructive conversations on various topics of interest with all participants, including the President of the United States” as reported by Bloomberg.
The key outside markets today see the U.S. dollar index slightly higher. Crude oil prices are weaker and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.07%.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, December gold futures bulls’ next upside price objective is to produce a close above solid resistance at $4,100.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,800.00. First resistance is seen at the overnight high of $4,024.20 and then at $4,050.00. First support is seen at the overnight low of $3,925.10 and then at $3,900.00. Wyckoff's Market Rating: 5.5.
December silver futures bulls' next upside price objective is closing prices above solid technical resistance at $50.00. The next downside price objective for the bears is closing prices below solid support at $45.00. First resistance is seen at this week’s high of $48.595 and then at $49.00. Next support is seen at $48.92 and then at this week’s low of $45.51. Wyckoff's Market Rating: 5.5
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