FB: Gold Lower in Wake of Hawkish FOMC and amid Stronger U.S. Dollar
(Kitco News) - Gold prices are lower and hit a three-week low in early U.S. trading Wednesday. The precious metals are feeling the bearish effects of rally in the U.S. dollar index that was prompted by a hawkish FOMC statement Wednesday afternoon. Silver futures prices hit a four-year low overnight. December Comex gold was last down $21.60 at $1,203.30 an ounce. Spot gold was last quoted down $8.30 at $1,203.75. December Comex silver last traded down $0.594 at $16.67 an ounce.
The market place is still digesting Wednesday afternoon’s FOMC statement that was deemed surprisingly hawkish on U.S. monetary policy. The Fed ended its monthly bond-buying program (quantitative easing), which was expected. However, the FOMC statement emphasized the improving U.S. economy, which led many to believe U.S. interest rates will be raised in 2015. The majority of traders and investors were looking for a dovish lean from the FOMC statement. The U.S. dollar index has posted a solid rally in the wake of the FOMC meeting and hit a three-week high overnight. The greenback is hovering near a four-year high. Meantime, the Euro currency and gold prices slumped on the FOMC statement. U.S. stock indexes sold off a bit on the FOMC news Wednesday, and were under modest pressure in early electronic trading Thursday.
In overnight news, the Euro zone got another downbeat economic report Thursday. EU consumer confidence came in at a reading of minus 11.1 in October from minus 11.4 in September. The report met market expectations but is another reminder of the ill economic health of the European Union, which is the world’s third-largest economy.
Nato warplanes are keeping a close eye on large-scale Russian military aircraft maneuvers that are occurring in Europe this week. This is likely more saber-rattling by Russian president Putin.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the third-quarter advance gross domestic product report,
Wyckoff’s Daily Risk Rating: 6.0 (The market place is significantly less anxious this week. However, there are still geopolitical risk factors lurking just around the corner.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fixing is $1,205.75 versus the previous P.M. fixing of $1,223.50.
Technically, gold bears have the solid overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,235.50. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,200.00. First resistance is seen at $1,210.00 and then at today’s high of $1,216.50. First support is seen at $1,200.00 and then at $1,190.00.
December silver futures bears have the solid near-term technical advantage and gained more power today. Prices hit a four-year low overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $17.40 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $16.00. First resistance is seen at $16.75 and then at $17.00. Next support is seen at $16.50 and then at $16.25.
