Gold, silver see steady price action ahead of FOMC conclusion

(Kitco News, Wed. May 4th, 2022) – Gold and silver prices are not trading far from unchanged in early U.S. dealings Wednesday. The precious metals and many other markets are in a pause mode ahead of the conclusion of the U.S. central bank meeting this afternoon. June gold futures were last down $0.90 at $1,869.70 and May Comex silver was last up $0.009 at $22.62 an ounce.

The economic data point of the week is the U.S. Federal Reserve Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the Fed will raise the key U.S. interest rate by 0.5%, amid the highest inflation levels in 40 years. A Barron’s headline this morning read: “The Fed’s big hikes won’t fight inflation from soaring oil prices.” The article argues that central banks can only control the demand side of the economic equation by raising interest rates — not the supply side.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins.

The European Union has proposed a phased-in ban on Russian crude oil imports and that has crude oil prices sharply higher at mid-week. The key outside markets today sees Nymex crude oil futures prices are trading around $106.50 a barrel. Meantime, the U.S. dollar index is a bit weaker in early trading. The yield on the 10-year U.S. Treasury note is presently fetching 2.965%. The 10-year yield early this week briefly hit a 3.5-year high just above 3%.

The Fed is ready to raise rates by 50 bps, but what comes next?

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the U.S. services PMI, the ISM report on business services and the weekly DOE liquid energy stocks report.

Technically, the June gold futures bears have the overall near-term technical advantage. A downtrend line is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,900.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at Tuesday’s high of $1,878.40 and then at $1,883.00. First support is seen at the overnight low of $1,861.10 and then at this week’s low of $1,849.70.

May silver futures bears have the solid overall near-term technical advantage. Prices are trending sharply down on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at this week’s high of $22.83 and then at $23.00. Next support is seen at Tuesday’s low of $22.475 and then at this week’s low of $22.12.

posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com