Gold sees relief after FOMC meeting, safe haven demand amid Russia fears
Editor’s Note: With so much market volatility out there, stay tuned for the daily news! Immerse yourself in minutes with our quick summary of today’s news and must-read expert opinions. Register here!
(Kitco News) – Gold prices rose strongly in US afternoon trade on Wednesday, after hitting a 2.5-year low earlier in the afternoon. The yellow metal is on a “comfortable rally” after the FOMC meeting statement with no major surprises, the expected interest rate hike and Fed Chair Powell’s comments at the press conference were no more hawkish than markets had expected. Also, the safe haven demand for gold and silver appears after Russia escalated its war effort and faced nuclear threats. Metals bulls were encouraged late in the afternoon as the US Dollar Index pulled back well off its day’s high. Gold for October last gained $24.20 at $1,685.20, and silver in December rose $0.737 to $19.92.
The Federal Reserve’s statement this afternoon saw the US central bank raise the key federal funds rate by 0.75% for the third consecutive meeting, to a range of 3.0% to 3.25%, in an effort by the Fed to curb 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 in the following two years. The statement said the Fed was “extremely alert” to inflation risks. The Federal Reserve also slightly lowered its forecast for US GDP growth.
The Bank of England is also holding its monetary policy meeting on Thursday and is also expected to raise interest rates.
Risk aversion remained high midweek after news that Russian President Putin would partially mobilize more Russian forces to fight in his war with Ukraine, including hinting in a speech that he might use nuclear weapons if Russia’s safety is threatened. One analyst said that the longer the war drags on and with Russia making little, if any, progress, the more threatened Putin will be, which could prompt the dictator to take more drastic measures to ensure his survival.
Global stock markets were mixed overnight, with most Asian stocks falling and European stocks mostly higher. US stock indices are more stable.
Today the major offshore markets are seeing a slight rise in NYMEX Crude Oil prices and are trading around $84.00 per barrel. The US Dollar Index rallied but reached a daily high after hitting a 20-year high earlier in the day. The yield on the 10-year US Treasury yields 3.524%.
Technically, the October gold futures bears have the overall technical advantage in the near term. However, today’s big “outside day” on the daily chart indicates that the bears are now exhausted and a near-term market bottom may be in place. The next bullish price target for the bulls is to produce a close above the solid resistance at $1700.00. The bears’ next bearish price target in the near term is pushing futures prices below the strong technical support level at $1,600.00. We see the first resistance at $1,700.00, then $1.715.00. First support is seen at the day’s low at $1,651.50 and then at $1,635.00. Wyckoff Market Rating: 2.0.
The December silver futures bears have a strong overall technical advantage in the near term. The next bullish price target for the silver bulls is to close prices above the strong technical resistance at $21.00. The next target for the bears downtrend price is a price close below the strong support level at $18.00. We notice the first resistance at the day’s high at $19.77, then $20.00. The next support is seen at $19.00 and then last week’s low at $18.77. Wyckoff Market Rating: 2.5.
Copper in New York closed in December down 425 points at 346.00 cents today. Prices closed near the session low today. Copper bears have the overall technical advantage in the near term. Copper bulls’ next bullish price target is to push and close prices above strong technical resistance at the August high of 378.35 cents. The bears’ downtrend price next target is a price close below strong technical support at the July low of 315.55 cents. We notice the first resistance at this week’s high at 355.80 cents, then 360.00 cents. First support is seen at last week’s low of 354.40 cents then 350.00 cents. Wyckoff Market Rating: 3.0.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.