(Kitco News) - Gold and silver prices are weaker in midday U.S. trading Wednesday, just ahead of the conclusion of the Federal Reserve’s FOMC meeting early this afternoon. Rising bond yields and inflation worries have been limiting buying interest in the two precious metals, which carry no yield or dividend. Deteriorating near-term technical postures for both metals are also keeping would-be buyers in the futures markets skittish. June gold was last down $36.20 at $4,572.60. May silver prices were down $1.619 at $71.585.
The Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends this afternoon with a statement and press conference from Fed Chair Jerome Powell. No change in U.S. monetary policy is expected at this week’s meeting. This FOMC meeting will likely be the last for Powell as head of the U.S. central bank. The Fed is widely expected to keep the federal funds rate unchanged at the 3.5%–3.75% target range for a third consecutive meeting. “The outlook for the rest of the year remains uncertain, with oil prices continuing to rise and inflation picking up due to the energy shock, even as labor market and broader economic indicators remain resilient,” said TradingEconomics.com.
The globe’s central banks added gold to their stockpiles at the fastest pace in more than a year in the first quarter, the World Gold Council reported, as a slump in prices encouraged a wave of buying that more than offset sales by a handful of institutions. Net official-sector purchases totaled 244 tons in the three months, up from 208 tons in the previous quarter, according to estimates from the WGC, an industry body. Poland, Uzbekistan and China were the largest reported buyers, although some other purchases were undeclared. Gold prices backing down from record highs may have prompted the central banks to step in and buy the dip. “It’s the first time in a while that we’ve seen a decent correction in gold,” said John Reade, chief strategist at the London-based WGC. “That has allowed central banks that might have been hanging back, waiting for exactly this opportunity, to come in and scoop up a load.”
The key outside markets today see the U.S. dollar index firmer, while Nymex WTI crude oil prices are solidly up and trading around $106.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.4%.
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, June gold futures bulls’ next upside price objective is to produce a close above solid resistance at the April high of $4,917.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,300.00. First resistance is seen at the overnight high of $4,624.30 and then at $4,700.00. First support is seen at $4,500.00 and then at $4,450.00. Wyckoff's Market Rating: 5.0.
May silver futures see the next upside price objective for the bulls is closing prices above solid technical resistance at the April high of $83.245. The next downside price objective for the bears is closing prices below solid support at $70.00. First resistance is seen at $75.00 and then at this week’s high of $76.555. Next support is seen at $71.00 and then at $70.00. Wyckoff's Market Rating: 5.0.
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