Gold choppy but lower as FOMC minutes show no hawkish surprises

Gold prices initially erased mild losses and traded firmer in the wake of the just-released FOMC minutes. However, prices have since sold off moderately. Many deemed the FOMC minutes as containing no hawkish surprises, which allowed the precious metals markets to briefly drift higher. Rising bond yields this week are a bearish element for the metals markets. June gold futures were last down $5.00 at $1,922.60 and May Comex silver was last down $0.104 at $24.43 an ounce.

The FOMC minutes showed members see a total monthly drawdown of $95 billion of U.S. securities (quantitative tightening). Many members favor a 50 basis point interest rate hike at the next FOMC meeting and possibly the same in the following few meetings thereafter. The members also believe the Russia-Ukraine war has caused inflationary pressures to significantly heat up.

On the front burner of the marketplace is rising inflation. On Tuesday, usually dovish Fed governor Lael Brainard said the Russia-Ukraine war has further stoked inflation and that inflation must be tamped down aggressively. She also suggested the Fed will begin selling off its big balance sheet of bonds (quantitative tightening). U.S. Treasury yields spiked up on her remarks. The benchmark U.S. 10-year Treasury note presently yields 2.611%. The 2-year/10-year Treasury note spread quickly snapped out of its inversion after Brainard’s hawkish tone on U.S. monetary policy.

Gold prices continue to consolidate above $1,900 as bond yields hit three-year high

Global stocks markets were mixed to weaker overnight. The U.S. stock indexes are lower today. The Russia-Ukraine war is still on the front burner of the marketplace as more economic sanctions are levied against Russia for its war atrocities against Ukrainian citizens. That is keeping energy prices elevated as European countries consider banning Russian energy imports.

Nymex crude oil prices are sharply lower and trading around $96.75 a barrel. Meantime, the U.S. dollar index is modestly higher today.

Technically, April gold futures bulls have the overall near-term technical advantage amid recent sideways and choppy trading. Bulls' next upside price objective is to produce a close above solid resistance at $1,967.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,888.30. First resistance is seen at today’s high of $1,937.60 and then at $1,950.00. First support is seen at today’s low of $1,916.20 and then at $1,900.00. Wyckoff's Market Rating: 6.0

May silver futures bulls have the slight overall near-term technical advantage. However, prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.16 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at today’s high of $24.68 and then at $25.00. Next support is seen at today’s low of $24.20 and then at the March low of $24.045. Wyckoff's Market Rating: 5.5.

May N.Y. copper closed down 705 points at 472.45 cents today. Prices closed nearer the session low today. The copper bulls have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 500.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 446.85 cents. First resistance is seen at today’s high of 478.85 cents and then at this week’s high of 486.00 cents. First support is seen at 466.90 cents and then at last week’s low of 464.20 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

Tim Moseley