Gold Sharply Lower in Aftermath of Hawkish FOMC, Rallying Greenback; Silver Sinks to 4-Year Low
New York (Oct 30) Gold prices ended the U.S. day session sharply lower and hit a three-week low Thursday. Precious metals have been hit hard by a stronger U.S. dollar and a surprisingly hawkish Federal Reserve. Silver prices slumped to a four-year low Thursday. December Comex gold was last down $25.50 at $1,199.40 an ounce. Spot gold was last quoted down $12.40 at $1,199.40. December Comex silver last traded down $0.804 at $16.46 an ounce.
After a weak overnight session, gold prices slumped further in late-morning U.S. trading Thursday. Prices fell below what was key near-term chart support at $1,200.00, which triggered fresh chart-based selling, including sell stop orders being hit in the futures market.
A strong advance third-quarter GDP report issued Thursday morning, at up 3.5% on an annual basis, further undermined the safe-have gold market.
The precious metals were still feeling the ill effects of a hawkish FOMC statement issued Wednesday afternoon. The FOMC statement 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 Thursday. The greenback is hovering near a four-year high. Meantime, Euro currency prices slumped on the FOMC statement.
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.
The London P.M. gold fix was $1,202.00 versus the previous London A.M. fixing of $1,205.75.
Technically, December gold futures prices closed nearer the daily low and hit another three-week low. The bears have the solid near-term technical advantage. Gold prices are now edging toward major longer-term technical support at the $1,183.00 area. A breach of the support level would open the door to a significant leg down in prices, and a move to the $1,000 level could not be ruled out. 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 $1,183.00. First resistance is seen at $1,210.00 and then at today’s high of $1,216.50. First support is seen at today’s low of $1,195.50 and then at $1,190.00. Wyckoff’s Market Rating: 1.5
December silver futures prices closed nearer the session low and hit a contract and four-year low today. The silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $17.40 an ounce.
Source: KitcoNews
