Easier Fed powers price gains for gold, silver

(Kitco News, Thurs. Dec. 14th, 2023 ) – Gold and silver prices sharply up in early U.S. trading Thursday, in the aftermath of a surprisingly dovish lean on U.S. monetary policy by the Federal Reserve. February goldwas last up $54.60 at $2,051.90. March silverwas last up $1.454 at $24.375. (Gold and silver futures prices had officially settled before the FOMC meeting concluded Wednesday. Thus, the big gains noted in today’s prices.)

The marketplace got a dovish surprise from the Federal Reserve Wednesday. While the Federal Open Market Committee (FOMC) left interest rates unchanged, the committee and Fed Chairman Jerome Powell pivoted from their heretofore hawkish rhetoric of a tight monetary policy and toward loosening policy, including future interest rate cuts. The Fed’s “dot plots” now indicate three interest rate cuts (totaling 0.75%) in 2024. Markets cheered the Fed news as the U.S. stock indexes hit new highs for the year, gold prices soared back above $2,000, the U.S. dollar index dropped sharply and Treasury yields declined. The benchmark 10-year note yield dropped below 4%. The now much-improved risk appetite in the general marketplace should work to support further gains in equities and commodity markets for at least the near term. A Barrons headline today reads: “Markets rejoice as Fed doves take flight….”

The Bank of England kept its monetary policy steady at its regular meeting Thursday. The European Central Bank monetary policy meeting was in progress as of this writing.

Asian and European stock markets were mostly higher overnight. U.S. stock index futures are set to open higher, at new contract highs and new highs for the year, when the New York day session begins. The Dow Jones Industrial Average set a record-high close Wednesday.

Fed’s Powell confirms FOMC believes terminal rate has been reached, says outlook reflects latest CPI and PPI data

The key outside markets today see the U.S. dollar index solidly lower and it a four-month low, on follow-through selling pressure from Wednesday’s sharp losses. Nymex crude oil prices are up and trading around $71.00 a barrel, after hitting a 5.5-month low Wednesday. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 3.974%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, retail sales, import and export price indexes, and manufacturing and trade inventories.

Gold Price in US Dollars

Technically, the gold futures bulls have the overall near-term technical advantage and have regained strength. Prices are in a nine-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,987.90. First resistance is seen at the overnight high of $2,055.20 and then at $2,072.70. First support is seen at the overnight low of $2,039.10 and then at $2,025.00. Wyckoff’s Market Rating: 7.0

The silver bulls have regained the overall near-term technical advantage. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at this week’s low of $22.785. First resistance is seen at $24.50 and then at $24.75. Next support is seen at $24.00 and then at $23.75.

Posted by:

Jack Dempsey, President
401 Gold Consultants LLC
(jdemp2003@gmail.com)