Gold and silver were hit hard by the hawkish Fed, and the dollar soared
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(Kitco News) – Gold and silver prices fell sharply in US midday trading on Thursday. Precious metals bulls were seeking cover today amid sharp gains in the US dollar index and in the aftermath of the FOMC meeting which saw the Fed remains hawkish on US monetary policy. Gold for the month of February fell $32.00 at $1786.00, and silver in March fell $0.836 at $23.305.
The still hawkish Federal Reserve had traders and investors in a “risk off” stance on Thursday. Two months of better-than-expected US inflation data were not enough to convince the Fed to abandon its tightening policy. “Higher for longer” is the market’s takeaway from this week’s FOMC meeting – meaning higher rates for a longer period of time – to ensure the Fed aggressively beats inflation.
Global stock markets fell overnight. US stock indices are down at midday.
Thursday’s European Central Bank and Bank of England monetary policy meetings saw both the Bank of England and the European Central Bank raise their key interest rate by 0.5%. This comes after the US Federal Reserve raised the interest rate by half a point. The central banks of Switzerland and Norway also raised interest rates on Thursday but also in smaller increments of policy tightening.
China and its fight against Covid remains near the front burner of the market. Moderator SP Angel said this morning in an email that there is mounting evidence that China is now “allowing Covid to circulate in the population.” There is relatively little and almost no effective vaccination against Omicron in China. “This means that the virus will bypass most of the Covid controls remaining in place.” The Wall Street Journal said today that “the Chinese economy took a big hit in November” due to strict COVID-19 lockdown policies.
Today, major foreign markets are witnessing a sharp rise in the US Dollar Index. NYMEX Crude Oil prices are weaker and are trading around $76.75 a barrel. Meanwhile, the yield on the 10-year US Treasury note is currently around 3.45%.
Technically, the February gold futures bulls are fading late this week but still have the overall near-term technical advantage. However, the 5-week uptrend on the daily chart is in danger. The next bullish price target for the bulls is to produce a close above the strong resistance at this week’s high at $1,836.90. Bears’ next bearish price target in the near term is pushing futures prices below the strong technical support level at $1750.00. We see the first resistance at $1,800.00 and then the day’s high at $1,819.70. The first support is seen at today’s low at $1,782.00 and then at $1,778.10. Wyckoff Market Rating: 6.0
The March silver bulls have a strong overall technical advantage in the near term. The prices are in a choppy 3.5 month upward trend on the daily bar chart. The next bullish price target for silver bulls is for prices to close above the strong technical resistance at $25.00. The next downtrend price target for the bears is to close the price below the strong support level at $22.00. We see first resistance at $24.00 and then this week’s high at $24.39. The next support is seen at today’s low of $23.155 and then $23.00. Wyckoff Market Rating: 6.5.
New York copper closed March down 1,125 points at 376.55 cents today. Prices closed near today’s session low. The copper bulls have a slight overall technical advantage in the near term. The next bullish price target for copper bulls is to push prices and close above the strong technical resistance at 400.00 cents. The next downside price target for bears is to close prices below the strong technical support at 354.70 cents. We notice the first resistance at today’s high at 386.75 cents, then this week’s high at 392.90 cents. The first support appears at 370.00 cents, then 360.00 cents. Wyckoff Market Rating: 5.5.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect the opinions of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will not be held liable for losses and/or damages arising from the use of this publication.
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