(Kitco News) -Gold prices were trading lower and dropped to a new 10-month low, in late afternoon U.S. trading Wednesday, in the aftermath of the Federal Reserve’s Federal Open Market Committee meeting, which saw the Federal funds rate raised by 0.25%, which was expected. However, the marketplace was a bit surprised at the more hawkish tone of the Fed statement and hawkish comments from Fed Chair Janet Yellen. February gold was last down $10.60 an ounce at $1,148.30. March silver was last down $0.037 at $16.94.
The U.S. dollar pushed solidly higher after the Fed rate hike and hawkish tone to Fed monetary policy, after trading weaker before the FOMC statement was released. The rallying greenback is a negative outside market force working against the precious metals at this time.
The U.S. stock market was also selling off after the Fed news. If stocks continue to back off in the near term, which would not be all that surprising given the recent gains that have taken stock indexes to multi-year or record highs this week, then such could wind up benefiting the competing asset, gold.
There was also a heavy slate of U.S. economic data released Wednesday, including the producer price index and retail sales. The producer price index in November came in at a “hot” rise of 0.4%, on an annual basis. A rise of only 0.1% was expected. The November PPI number hints of rising inflationary price pressures that would be bullish for hard assets like the precious metals, if inflation becomes problematic. Meantime, U.S. retail sales data showed a weaker-than-expected rise of 0.1% in November from October, and were up 3.8%, year-on-year.
The other key “outside market” on Wednesday saw Nymex crude oil prices lower on a corrective pullback after hitting a 16-month high Monday.
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Technically, February gold futures bears have the solid overall near-term technical advantage. There are still no early clues of a market bottom. Prices are in a six-month-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,125.00. First resistance is seen at this week’s high of $1,167.90 and then at $1,175.00. First support is seen at today’s low of $1,145.70 and then at $1,140.00. Wyckoff's Market Rating: 2.0
March silver futures prices closed near mid-range today on short covering. The silver market bears still have the overall near-term technical advantage. However, there are early clues to begin to suggest that a market bottom is in place for silver. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of $16.245. First resistance is seen at last week’s high of $17.30 and then at $17.50. Next support is seen at this week’s low of $16.735 and then at $16.50. Wyckoff's Market Rating: 3.0.
March N.Y. copper closed up 20 points at 260.05 cents today. Prices closed near mid-range today. More profit taking was featured. The copper bulls still have the firm overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 275.30 cents. The next downside price objective for the bears is closing prices below solid technical support at 250.00 cents. First resistance is seen at today’s high of 264.50 cents and then at this week’s high of 268.50 cents. First support is seen at this week’s low of 256.65 cents and then at 255.00 cents. Wyckoff's Market Rating: 6.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow Jim Wyckoff @jimwyckoff
