Gold sees post-FOMC relief rally, safe-haven demand on Russia worries

Gold prices are solidly higher in afternoon U.S. trading Wednesday, after hitting a nearly 2.5-year low earlier in the afternoon. The yellow metal is seeing a “relief rally” after the FOMC meeting statement with no major surprises, an as-expected interest rate increase and Fed Chair Powell’s press conference comments were not deemed more hawkish than the marketplace expected. Also, safe-haven demand is featured in gold and silver after Russia escalated its war efforts and made nuclear threats. The metals bulls were further encouraged late this afternoon as the U.S. dollar index backed well down from its daily high. October gold was last up $24.20 at $1,685.20 and December silver was up $0.737 at $19.92.

This afternoon’s Federal Reserve FOMC statement saw the U.S. central bank raise the key Fed funds rate by 0.75% for the third straight meeting, to a range of 3.0% to 3.25%, in the Fed’s effort to tamp down problematic price inflation. The statement said the Fed sees the Fed funds rate at 4.6% at the end of 2023 and then declining slightly the following two years. The Fed is “highly attentive” to inflation risks, said the statement. The Fed also slightly lowered its forecast for U.S. GDP growth.

The Bank of England also holds its monetary policy meeting Thursday and is also expected to raise interest rates.

Risk aversion remains elevated at mid-week following news that Russian President Putin will partially mobilize more Russian troops to fight in his war with Ukraine, including implying in a speech that he could use nuclear weapons if Russia’s integrity is threatened. One analyst said the longer the war drags on and with Russia making little if any further progress, the more threatened Putin will become, which could prompt the dictator to take more drastic measures to ensure his own survival.

Gold sees new safe haven allure as Putin threatens to use all instruments to defend its territory

Global stock markets were mixed overnight, with Asian shares mostly down and European shares mostly up. U.S. stock indexes are firmer.

The key outside markets today see Nymex crude oil prices slightly up and trading around $84.00 a barrel. The U.S. dollar index is higher but well of its daily high after pushing to another 20-year high early on today. The yield on the 10-year U.S. Treasury note is fetching 3.524%.

Technically, October gold futures bears have the overall near-term technical advantage. However, today’s big “outside day” up on the daily bar chart does suggest the bears are now exhausted and that a near-term market bottom may be in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at $1,700.00 and then at $1,715.00. First support is seen at today’s low of $1,651.50 and then at $1,635.00. Wyckoff's Market Rating: 2.0.

December silver futures bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $21.00. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at today’s high of $19.77 and then at $20.00. Next support is seen at $19.00 and then at last week’s low of $18.77. Wyckoff's Market Rating: 2.5.

December N.Y. copper closed down 425 points at 346.00 cents today. Prices closed near the session low today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the August high of 378.35 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at this week’s high of 355.80 cents and then at 360.00 cents. First support is seen at last week’s low of the September low of 354.40 cents and then at 350.00 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley