Gold Price Down On Bearish Elements; Fed Rate Hike Likely Factored In
New York (Dec 13) Gold prices ended the U.S. day session moderately lower Tuesday. Prices are hovering not far above Monday’s 10-month low. Bearish technical charts, upbeat trader and investor optimism and a firmer U.S. dollar index continue to work against the safe-haven metal. February Comex gold was last down $7.10 an ounce at $1,158.80. March Comex silver was last down $0.252 at $16.935 an ounce.
The marketplace is anticipating the results of what is arguably the most important economic event of the month: the U.S. Federal Reserve FOMC meeting that began Tuesday morning and ends Wednesday afternoon with a statement. Most believe the Fed will raise interest rates for the first time in a year. In fact, the Fed funds futures market shows a 100% chance the Fed will raise U.S. interest rates this week. With a Fed rate hike so fully expected, the markets have mostly factored such into their price structures. Thus, don’t be surprised to see many markets show a “buy the rumor, sell the fact” scenario following the actual announcement of the Fed rate hike. In gold and silver markets’ case, it would be “sell the rumor, buy the fact.”
The key “outside markets” on Tuesday saw Nymex crude oil prices trade firmer, on some follow-through strength after spiking to a 16-month high on Monday and then backing off the high by the close Monday. The U.S. dollar index traded slightly higher in early U.S. trading. The greenback bulls remain technically strong as prices are not far below the recent 13-year high.
Technically, February gold futures closed prices closed near mid-range today. The gold bears have the solid overall near-term technical advantage. There are still no early clues of a market bottom. Prices are in a six-month-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,125.00.
Source: KitcoNews
