Gold Price Sees Follow-Through Selling After Hawkish FOMC; Technical Sellers Back in the Market
New York (Oct 29) Gold futures prices ended the U.S. day session lower Thursday, in the aftermath of a bearish report from the Federal Reserve. The strong downside price action in the gold and silver markets Wednesday afternoon and then the follow-through pressure Thursday have changed the near-term technical postures in both markets from slightly bullish to slightly bearish. The big daily price change discrepancy between the gold futures and the cash markets Thursday was due to the Comex futures market officially closing before the FOMC statement was released early Wednesday afternoon. December Comex gold was last down $28.60 at $1,147.50 an ounce. The spot gold market was last down $8.10 at $1,148.00. December Comex silver was last down $0.728 at $15.565 an ounce.
The FOMC statement provided a big and bearish jolt for the precious metals markets and the rest of the raw commodity sector. The marketplace on Thursday was still digesting the results of the Federal Reserve’s latest monetary policy meeting. That meeting did not see FOMC members raise U.S. interest rates, but the statement afterward was deemed hawkish. The Fed downplayed world economic developments, which apparently included recent monetary policy stimulus from China and the likelihood that the European Central Bank will implement fresh stimulus in December. The FOMC statement also hinted 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 and expected a more dovish statement.
The U.S. dollar shot higher on the FOMC news and hit a 2.5-month high Wednesday afternoon, but about half of those gains were taken back with Thursday’s downside price action in the index. Still, the technical posture of the dollar index became more bullish with Wednesday’s rally, and that’s a bearish element for the precious metals and the raw commodity sector.
The third-quarter advance U.S. gross domestic product report was released Thursday and came in at up 1.5%, on an annual basis, which was in line with market expectations and had little impact on the markets.
In overnight news, the Euro zone consumer confidence index came in at -7.7 in October from -7.1 in September. This is yet another downbeat economic data point that will likely prompt the ECB to initiate more monetary stimulus soon.
Technically, December gold futures prices closed nearer the daily low and hit a three-week low today. The gold bears now have the slight overall near-term technical advantage and have momentum on their side. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,170.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,125.00. First resistance is seen at $1,156.40 and then today’s high of $1,162.50. First support is seen at today’s low of $1,146.80 and then at $1,140.00. Wyckoff’s Market Rating: 4.5
December silver futures prices closed near the session low and hit a three-week low today. This market has made a dramatic “about face” the past two sessions. The silver market bears have gained the slight near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $16.37 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at $15.75 and then at $16.00. Next support is seen at $15.50 and then at $15.375.
Source: KitcoNews
