(Kitco News) - Gold prices were moderately higher in afternoon trading Wednesday, in the wake of much-anticipated FOMC minutes that contained something for both the U.S. monetary policy hawks and the doves, but which moved gold prices only slightly higher. Gold scored a four-week high Wednesday on safe-haven demand amid market place worries about China’s stock market and financial system. December Comex gold was last up $12.60 at $1,129.80 an ounce. September Comex silver was last up $0.455 at $15.245 an ounce.

The Wednesday afternoon early release (one news service broke the embargo) of the FOMC minutes from last month’s meeting saw traders and investors looking for further clues on the precise timing of the expected upcoming U.S. interest rate hike. The Fed said it will continue to monitor upcoming economic data in order to determine the timing of a U.S. interest rate hike. The minutes said the Fed is also concerned about recent developments with China’s economy. While the monetary policy hawks and doves debated the FOMC minutes, the U.S. dollar saw a solid sell-off in the wake of the minutes, which would favor the doves. Gold prices got just a slight boost in the aftermath of the FOMC minutes.

The big data day of the trading week Wednesday also saw the U.S. consumer price index for July released, coming in at up 0.2%. The core CPI, which excludes food and energy, was up 0.1% in July. The overall CPI figure was expected to be up 0.2% in July. Gold prices saw a brief bump up in prices following this data, as the CPI figure falls into the camp of the monetary policy doves who do not want to see the Fed raise U.S. interest rates any time soon. However, it can also be argued the deflationary tone of the CPI and other world inflation data are bearish for raw commodities, including gold.

The Chinese stock market again sold off sharply in early trading Wednesday, but then rebounded to finish above unchanged by the end of the day. But reports said the rebound in the Shanghai stock index Wednesday was mostly due to the Chinese government being the biggest buyer. Other Asian and European stock markets were under selling pressure Wednesday, on worries about the health of China’s economy and its financial markets. Last week China’s central bank devalued the Chinese yuan by around 3%. The worry Chinese monetary officials have now is that capital outflows from China will occur due to the weaker yuan. There is also talk among Asian market watchers that China will soon announce further monetary policy stimulus measures to support its wobbly economy.

The Minneapolis Fed’s Kocherlakota said in a newspaper op-ed story Wednesday that deflationary price pressures are a threat to world economies and that the Fed should not raise interest rates during such a scenario, and in fact should be further easing U.S. monetary policy.

The London P.M. gold fix is $1,126.15 versus the previous A.M. fix of $1,123.20.

Technically, December gold futures prices closed nearer the session high and hit a four-week high today. Gold bears still have the overall near-term technical advantage. However, recent price action suggests that a near-term market bottom is in place. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,150.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,100.00. First resistance is seen at today’s high of $1,131.40 and then at $1,133.80. First support is seen at $1,120.00 and then at today’s low of $1,115.50. Wyckoff’s Market Rating: 3.0

September silver futures prices closed nearer the session high today and took back most of Tuesday’s big losses. Silver bears still have the overall near-term technical advantage. However, today’s price action reassured the bulls that a near-term market bottom could be in place. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the August high of $15.585 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the July low of $14.33. First resistance is seen at this week’s high of $15.375 and then at $15.50. Next support is seen at $15.00 and then at today’s low of $14.795. Wyckoff's Market Rating: 2.5.

September N.Y. copper closed down 45 points at 228.25 cents today. Prices closed near mid-range and poked to another contract and six-year low today. Copper bears have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the August high of 242.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 220.00 cents. First resistance is seen at 230.00 cents and then at Tuesday’s high of 232.60 cents. First support is seen at today’s contract low of 226.05 cents and then at 225.00 cents. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff
Wednesday August 19, 2015 14:27

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