Gold, silver see solid price gains, post FOMC

(Kitco News, Thurs.  Dex. 16th, 2021)– Gold and silver prices are posting good gains in early U.S. trading Thursday. The metals market traders on this day are reckoning that rising inflation prospects are bullish, as shown by market history. A lower U.S. dollar index today is also friendly for the metals bulls. The safe-haven metals are rallying despite upbeat trader and investor risk appetite late this week. Trading in the metals markets this week is a prime example of the old trading adage, “markets can remain illogical longer than traders can remain solvent.” February gold was last up $24.80 at $1,789.30 and March Comex silver was last up $0.715 at $22.265 an ounce.

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, including the S&P 500 hitting a new record high overnight.

Traders and investors Thursday are still digesting the U.S. Federal Reserve FOMC meeting results. The FOMC statement somewhat surprisingly said three interest rate increases are likely in 2022, and that U.S. inflation is rising but suggested it will back off in the coming months. The FOMC is accelerating its monthly asset purchases tapering, which will end in March. The marketplace correctly expected a hawkish lean from the FOMC, but the better clarity on timing and actions of the Fed appeared to assuage traders of many markets, as evidenced by the rally in U.S. stock indexes, stable bond yields and a weaker U.S. dollar index.

Now, the marketplace is awaiting the results of today’s European Central Bank and Bank of England monetary policy meetings. The BOE just announced it is raising its main interest rate by 15 basis points (0.15%).

The ECB make changes to QE

The pandemic never seems to stray too far from the front burner of the marketplace. Bloomberg today reports “the lockdown mentality turning London into a ghost town is starting to feel like the real thing as Europe resurrects stiff border controls and another Christmas looks set to be lost to the virus.”

The key “outside markets” today see Nymex crude oil prices higher and trading around $72.00 a barrel. The U.S. dollar index is weaker solidly lower today but still not far below its recent high. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.434%.

Another busy day for U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction, industrial production and capacity utilization, the U.S. flash services and manufacturing PMIs, and the Kansas City Fed manufacturing survey.

Technically, February gold futures bulls and bears are on a level overall near-term technical playing field as trading has been sideways and choppy for two weeks. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,753.00. First resistance is seen at this week’s high of $1,792.80 and then at $1,800.00. First support is seen at the overnight low of $1,775.70 and then at the November low of $1,761.00.

The March silver bears have the solid overall near-term technical advantage. Prices hit a 17-month low Wednesday. Prices have been trending down for four weeks. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at the this week’s high of $22.43 and then at $22.635. Next support is seen at the overnight low of $21.93 and then at this week’s low of $21.41.

Posted by :

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com