Gold and silver prices higher as FOMC outcome on deck
London (June 10) Gold and silver prices are higher in early U.S. trading Wednesday, as the bulls are so far having a good week. Today concludes the two-day meeting of the Federal Reserve’s Open Market Committee (FOMC) that will see an afternoon statement, along with a press conference from Fed Chairman Jay Powell. No change in interest rates is expected. However, the Fed’s economic projections and Powell’s remarks will be closely scrutinized and will probably move markets to some degree, including the metals. August gold futures were last up $8.70 an ounce at $1,730.60. July Comex silver prices were last up $0.281 at $18.075 an ounce.
Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The Nasdaq index Tuesday hit another record high, while the S&P 500 stock index on Monday hit a three-month high. Risk appetite remains generally upbeat at mid-week as businesses in major economies continue to open back up after the Covid-19 lockdown and social distancing guidelines are relaxed.
In overnight news, the OECD think tank forecast global economic growth will fall 6% this year, if a second wave of Covid-19 can be avoided. The OECD also said the world economy “is on a tightrope” and a second wave of the pandemic would be a terrible blow to the world economy.
China got some dour economic news at mid-week as it reported its industrial prices in May fell by 3.7%, year-on-year. Consumer inflation fell to a 2.4% growth rate. Both figures undershot market expectations.
The important outside markets see the U.S. dollar index slightly lower and hitting a three-month low overnight. The greenback is in a serious swoon. Meantime, Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high above $40.00 Monday, and is trading around $38.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.79% level.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings and the weekly DOE liquid energy stocks report.
Technically, the gold bulls are having a good week as they work to negate a price downtrend still in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $1,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,740.00 and then at $1,750.00. First support is seen at the overnight low of $1,718.70 and then at $1,710.00.
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