Price gains for gold, silver as FOMC conclusion, Powell on deck

(Kitco News, Wed. Nov. 2nd, 2022) – Gold and silver prices are higher in early U.S. trading Wednesday. A lower U.S. dollar index and stable U.S. Treasury yields at mid-week are prompting some buying interest. Traders are awaiting the big news of the week, if not the month, this afternoon: the conclusion of the FOMC meeting and Fed Chairman Jerome Powell’s press conference. Look for higher markets volatility this afternoon, in the wake of those events. December gold was last up $10.40 at $1,659.80 and December silver was up $0.138 at $19.805.

The marketplace is on hold ahead of the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement and a press conference from Fed Chairman Powell. Most expect the FOMC to raise the Fed funds rate by another 0.75%. However, the million-dollar questions for traders and investors may be answered by comments the FOMC and Powell make regarding the future path of U.S. monetary policy. Specifically, will the Fed will back off the accelerator on aggressively raising interest rates and begin to pivot? FOMC/Powell hints of a pivot are likely to boost risk assets like stocks and commodities. However, a still-aggressive tone on U.S. monetary policy coming from the Fed would likely pressure stocks, bonds and commodities. A Barron’s headline today reads, “Recession is the dark cloud hanging over Powell’s inflation-busting Fed.”

Global stock markets were mixed overnight. U.S. stock indexes are headed for mixed openings when the New York day session begins.

In overnight news, the Euro zone received downbeat economic data when its October manufacturing purchasing managers index (PMI) came in at 46.4, which was slightly below market expectations. A reading below 50.0 suggests contraction in the sector.

The marketplace is still buzzing about unconfirmed reports the Chinese government has set up a committee to wind down its zero-Covid policies. There has been no confirmation from Chinese government officials, with at least one top-ranking official saying he knew nothing of the matter.

Central banks buy record amount of gold in Q3 and large chunks are from unknown buyers

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are modestly down and trading around $88.00 a barrel. The 10-year U.S. Treasury note is yielding 4.053%.

Other U.S. economic data due for release Wednesday includes the weekly mortgage applications survey, the ADP national employment report, the global manufacturing PMI and the weekly DOE liquid energy stocks report.

Technically, the gold futures bears still have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,600.00. First resistance is seen at $1,670.90 and then at last week’s high of $1,679.40. First support is seen at this week’s low of $1,633.60 and then at the October low of $1,621.10.

The silver bulls have the overall near-term technical advantage. Prices are in a choppy uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the October high of $21.31. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at this week’s high of $20.04 and then at $20.50. Next support is seen at $19.50 and then at Tuesday’s low of $19.085.