Gold Steady-Weak After FOMC Minutes; Outside Markets Limit Upside

(Kitco News) - Gold prices were trading modestly lower in early afternoon U.S. trading Wednesday, in the aftermath of the September FOMC minutes report that did not contain significant markets-moving details. The precious metals were weighed down by the recent solid rally in the U.S. dollar index, which hit a seven-month high today. December Comex gold was last down $1.70 an ounce at $1,253.80. December Comex silver was last down $0.004 at $17.51 an ounce.

The FOMC minutes from the September meeting showed it was a close call on raising interest rates at the meeting, but the monetary doves did win out. However, there are growing ideas the Fed will make a rate hike yet this year, and probably in December.

For months, traders and investors have been fixated on the major central banks and their monetary policies.

A feature in the marketplace this week is the stronger U.S. dollar index. The appreciating greenback is a bearish outside market force that is working against the precious metals markets and other raw commodity markets.

Nymex crude oil prices were weaker Wednesday, on profit taking from recent good gains. Still, the crude oil bulls have seen success recently as prices are trending higher and are near a three-month high. Crude oil’s daily price movements continue to have an influence over many other markets, and especially world stock markets.

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Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

Technically, December gold futures bears have the overall near-term technical advantage and still have some downside momentum. A bearish pennant pattern has formed on the daily bar chart. Prices are in a three-month-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,225.00. First resistance is seen at today’s high of $1,260.50 and then at this week’s high of $1,266.80. First support is seen at $1,250.00 and then at last week’s low of $1,243.20. Wyckoff’s Market Rating: 3.5

December silver bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.46 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is at today’s high of $17.64 and then at this week’s high of $17.855. Next support is seen at the today’s low of $17.38 and then at last week’s low of $17.115. Wyckoff's Market Rating: 3.5.

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