Gold Price Loses Gains In Wake Of Hawkish FOMC Statement
New York (Oct 28) Gold prices were materially lower in afternoon US trading Wednesday, following a surprisingly hawkish-construed FOMC statement by the U.S. central bank that fell into the camp of the precious metals markets bears. The gold market gave up decent gains that were in place just before the FOMC statement. Spot gold was sharply done $12 to $$1156, whil spot silver was down only 4 cents at $$15.87.
The Federal Reserve’s FOMC monetary policy meeting issued a statement Wednesday afternoon that did not raise U.S. interest rates. However, the Fed downplayed world economic developments, which seemed to include recent monetary policy stimulus from China and the likelihood that the European Central Bank will implement fresh stimulus in December. The FOMC statement also intimated that a U.S. rate hike still could be coming in December.
Most of the marketplace did not expect the Fed to raise U.S. interest rates at this week’s meeting. In fact, recent downbeat world economic data had much of the marketplace thinking the Fed will not move to raise interest rates at its December meeting. Thus, the FOMC statement “wrong-footed” the marketplace.
While gold and silver prices lost altitude, so did the U.S. stock market. The U.S. dollar index pushed solidly higher on the FOMC news, after trading moderately lower just before the FOMC statement. The rallying greenback is a negative underlying element for the precious metals markets.
The other outside market saw Nymex crude oil prices rally strongly on a short-covering bounce and a bullish weekly DOE liquid energy stocks report, after dropping to a two-month low on Tuesday. This did work to mitigate the bearish FOMC statement for the precious metals.
In overnight news, Sweden’s central bank announced it will extend its quantitative easing program of bond buying, but did not reduce its interest rates. The move by the Riksbank had little impact on the marketplace.
Technically, December gold futures were nearer the daily low in the afternoon. The gold bulls still have the slight overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,191.70. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at $1,175.00 and then today’s high of $1,183.10. First support is seen at last week’s low of $1,158.60 and then at $1,156.40. Wyckoff’s Market Rating: 5.5
December silver futures prices closed near mid-range and did hit a 4.5-month high today. The silver market bulls have the near-term technical advantage and gained some fresh power today. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.37. First resistance is seen at today’s high of $16.37 and then at $16.50. Next support is seen at today’s low of $15.835 and then at $15.61. Wyckoff's Market Rating: 6.0.
December N.Y. copper closed down 160 points at 234.50 cents today. Prices closed near mid-range and hit a three-week low today. Copper bears have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the September high of 249.30 cents.