Gold, silver down amid strong greenback, rising bond yields

Gold and silver prices are lower in midday U.S. trading Thursday, with gold hitting a six-week low in overnight dealings. Silver prices have rebounded well off daily lows. Very sharp gains in the U.S. dollar index and rising U.S. Treasury yields, along with lower crude oil prices, pressured the precious metals markets today. December gold was last down $22.20 at $1,627.80 and December silver was down $0.239 at $19.36.

A still-hawkish Federal Reserve is keeping the metals market bulls squelched. The Fed's Open Market Committee (FOMC) statement Wednesday afternoon initially was viewed as less hawkish. The U.S. central bank raised its main Fed funds rate by 0.75%, to 4.0%, as expected. The FOMC statement said the Fed will take into consideration the health of the U.S. economy after its recent "cumulative tightening." The markets initially read that statement as leaning less hawkish on U.S. monetary policy going forward. The U.S. dollar index sold off and U.S. Treasury yields dropped, while U.S. stock indexes and gold rallied. However, once Fed Chairman Powell started speaking at his press conference and took a still-hard line on the Fed's intent to keep raising rates to stop problematic price inflation, the aforementioned markets promptly reversed course. "Powell dropped the hammer," quipped one business TV anchor. Powell in his presser implied the Fed's terminal interest rate may have to rise higher than earlier Fed expectations—likely above 5%–and stay at that higher level for longer. Notions of a Fed pivot on its aggressive monetary policy tightening were dashed at Powell's presser. More hawkish central banks and in turn weaker economies also suggest less consumer and commercial demand for the metals.

Expect a '75 bps hike,' as Powell zeroes in on inflation – Chance Finucane

Global stock markets were mostly lower overnight. U.S. stock indexes are lower at midday. Risk-off attitudes are keener in the marketplace late this week.

The key outside markets today see the U.S. dollar index very sharply higher. Nymex crude oil prices are lower and trading around $89.00 a barrel. The 10-year U.S. Treasury note is yielding 4.149%.

Focus quickly turns to Friday's monthly U.S. employment report for October from the Labor Department. The key non-farm payrolls number is expected to come in at up 205,000, compared to a rise of 263,000 in the September report.

Technically, the gold futures bears have the solid overall near-term technical advantage. Prices are in a longer-term downtrend on the daily bar chart. 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 today's high of $1,643.20 and then at $1,650.00. First support is seen at today's low of $1,618.30 and then at $1,600.00. Wyckoff's Market Rating: 1.0.

The silver bulls have the slight overall near-term technical advantage. Prices are still in a choppy two-month-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $19.60 and then at this week's high of $20.11. Next support is seen at $19.00 and then at today's low of $18.805. Wyckoff's Market Rating: 5.5.

December N.Y. copper closed down 385 points at 342.95 cents today. Prices closed near mid-range today. The copper bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 369.25 cents. The next downside price objective for the bears is closing prices below solid technical support at the September low of 324.30 cents. First resistance is seen at this week's high of 350.85 cents and then at the October high of 359.30 cents. First support is seen at this week's low of 336.15 and then at the October low of 330.30 cents. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

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