(Kitco News) - Gold and silver prices are higher in midday U.S. trading Thursday, with silver posting sharp gains. Corrective rebounds are featured in both metals today following a somewhat surprisingly hawkish tone on U.S. monetary policy that was struck be Federal Reserve Chairman Powell on Wednesday afternoon. That pressured the precious metals markets late Wednesday afternoon and overnight. December gold was last up $13.20 at $4,014.20. December silver prices were up $0.717 at $48.63.
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.
In other 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.
The key outside markets today see the U.S. dollar index higher and hitting a three-month high. Crude oil prices are near steady and trading around $60.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.078%.
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 today’s high of $4,028.30 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 today’s high of $48.735 and then at $49.00. Next support is seen at $48.00 and then at $47.50. Wyckoff's Market Rating: 6.0.
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