Gold Sinks to 3-Week Low in Aftermath of Hawkish FOMC Minutes

(Kitco News) - Gold prices ended the U.S. day session solidly lower and scored a three-week low Thursday, on follow-through selling pressure in the wake of bearish FOMC minutes that were released Wednesday afternoon. Prices did finish up from the daily lows Thursday. An appreciating U.S. dollar following the FOMC minutes is also working against the precious metals markets bulls. The U.S. dollar index hit a four-week high today. June Comex gold futures were last down $18.60 an ounce at $1,255.90. July Comex silver was last down $0.627 at $16.505 an ounce.

Nymex crude oil prices were also lower on the day Thursday, to make the key outside markets in a bearish posture for the precious metals and the raw commodity sector.

The marketplace was still digesting the minutes of the latest Federal Open Market Committee (FOMC) meeting. The minutes said FOMC members will raise U.S. interest rates in June if second-quarter U.S. economic growth continues on a sound track, which is what the FOMC expects to happen. Thus, unless there is some seriously downbeat economic data released in the next few weeks, there will be another Fed rate hike in June. The FOMC minutes were deemed hawkish on U.S. monetary policy and were a bit of a surprise to most.

The U.S. dollar index has rallied in the aftermath of the FOMC report. World stock markets were mostly weaker overnight, partly on the FOMC news. U.S. stock indexes were weaker in afternoon New York trading Thursday. The appreciating value of the greenback has also put downside price pressure into many raw commodity markets.

Traders and investors are closely monitoring news reports that an Egyptian airliner with 66 people on board, which took off from Paris and was headed to Cairo, has disappeared from radar screens. Early indications point to terrorism. This news also took away some risk appetite in the world marketplace.

Technically, June gold futures prices closed near mid-range and hit a three-week low today. The gold still bulls have the firm overall near-term technical advantage but are fading now. Prices are in a near-term downtrend. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,290.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,225.00. First resistance is seen at today’s high of $1,262.30 and then at $1,270.00. First support is seen at today’s low of $1,244.60 and then at $1,240.00. Wyckoff’s Market Rating: 6.5

July silver futures prices closed nearer the session low and hit a four-week low today. The silver market bulls have the overall near-term technical advantage, but have faded badly as a near-term downtrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at $17.00 and then at $17.25. Next support is seen at today’s low of $16.35 and then at $16.25. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed down 160 points at 206.25 cents today. Prices closed nearer the session high and hit a three-month low early on today. The key “outside markets” were in a bearish posture for copper today, as the U.S. dollar index was higher and crude oil prices were lower. The copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 200.00 cents. First resistance is seen at this week’s high of 211.15 cents and then at 214.00 cents. First support is seen at today’s low of 203.80 cents and then at 202.00 cents. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com