(Kitco News) - Gold prices are sharply higher in midday U.S. trading Thursday as the yellow metal is riding the strong tailwind of huge daily gains in the silver market that pushed the metal to yet another all-time high. The two precious metals are seeing solid technical buying and are benefiting from a surprisingly dovish lean from the Federal Reserve. Strong losses in the U.S. dollar index that drove it to a six-week low today are also supporting buying interest in precious metals. February gold was last up $65.10 at $4,289.50. March silver prices were up $2.80 at $63.82 and hit an intra-day record high of $64.03.
The Federal Reserve’s Open Market Committee on Wednesday afternoon delivered a 0.25% interest rate cut, which was fully expected by the marketplace and was the third quarter-point rate cut in a row at the FOMC meetings. The FOMC voted 9-3 to lower the benchmark federal funds rate by a quarter point to a range of 3.5%-3.75%. The FOMC statement suggested greater uncertainty about when the Fed might cut rates again. The Fed surprised markets by saying it will begin buying $40 billion of Treasury bills per month starting Friday, in a move to further ease short-term funding costs by rebuilding reserves in the financial system. Money markets have been flashing signals in recent months that pressures were building up in the $12.6 trillion market while the Fed was shrinking its balance sheet. U.S. stock indexes rallied, U.S. Treasury yields dipped, the U.S. dollar index sold off, and gold and silver prices rallied following the FOMC meeting’s conclusion and Fed Chair Jerome Powell’s press conference Wednesday afternoon. In the days leading up to this week’s FOMC meeting, most of the marketplace came to reckon that despite the expected rate cut, the Fed and Powell would deliver a somewhat more hawkish tone on U.S. monetary policy. However, the marketplace saw the Fed’s dovish move to buy U.S. Treasury bills as usurping any other Fed rhetoric that might have been deemed hawkish.
The other key outside market today sees crude oil prices lower trading around $57.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.14%.
Technically, February gold futures bulls’ next upside price objective is to produce a close above solid resistance at the contract/record high of $4,433.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,100.00. First resistance is seen at $4,300.00 and then at $4,350.00. First support is seen at this week’s low of $4,197.80 and then at $4,150.00. Wyckoff's Market Rating: 7.5.
March silver futures bulls’ next upside price objective is closing prices above solid technical resistance at $70.00. The next downside price objective for the bears is closing prices below solid support at $57.00. First resistance is seen at today’s record high of $64.035 and then at $64.50. Next support is seen at today’s low of $61.78 and then at $60.00. Wyckoff's Market Rating: 10.0.
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