Gold, silver down on demand concerns – no reaction to FOMC minutes

Gold and silver prices are lower in afternoon U.S. trading Wednesday, amid worries about demand for precious metals following this week’s downbeat economic data coming out of China and still-heightened worries about a U.S. and/or global recession. Rising U.S. Treasury bond yields and a firmer U.S. dollar index on this day were also bearish outside market elements for the metals markets. October gold futures were last down $11.00 at $1,768.50. September Comex silver futures were last down $0.29 at $19.79 an ounce.

The just-released minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC) showed members remained concerned about inflation, believing it will remain elevated for some time to come. Members expect “ongoing increases” in the Federal Funds rate—the main U.S. interest rate. The FOMC members also said the U.S. economy’s trajectory was noticeably weaker than what they thought at the previous FOMC meeting. The marketplace was looking for clues on the timing and degrees of upcoming monetary policy tightening from the U.S. central bank. Right now, the Fed funds futures market is putting nearly even odds on either a 0.5% or a 0.75% interest rate increase at the September FOMC meeting. The marketplace, and the metals, showed now significant reaction to the minutes, which contained no big surprises.

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Global stock markets were mixed overnight, with Asian indexes mostly up and European indexes mostly down. U.S. stock indexes are lower in afternoon trading, on routine corrective pullbacks after hitting four-month highs on Tuesday. Corporate earnings reports are in focus this week.

The key outside markets today see Nymex crude oil prices higher and trading around $88.00 a barrel. The U.S. dollar index is higher in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 2.9%.

Technically, October gold futures prices hit a two-month low today. The gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the August high of $1,814.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,786.30 and then at 1,800.00. First support is seen at the August low of $1,759.70 and then at $1,750.00. Wyckoff's Market Rating: 3.0.

September silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $20.00 and then at $20.25. Next support is seen at $19.47 and then at $19.25. Wyckoff's Market Rating: 3.0.

September N.Y. copper closed down 440 points at 358.05 cents today. Prices closed nearer the session low. The copper bulls and bears are on a level overall near-term technical playing field. Prices are trending up on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 385.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 330.00 cents. First resistance is seen at last week’s high of 371.30 cents and then at 380.00 cents. First support is seen at this week’s low of 354.60 cents and then at 350.00 cents. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

Tim Moseley