Gold Holding Solid Losses Heading Into U.S. Close

(Kitco News) - Gold prices are heading into the U.S. futures close with solid declines, near their session lows, and hit a three-week low Thursday, in the wake of this week’s FOMC meeting that saw a U.S. interest rate increase and a hawkish tone on monetary policy from the Federal Reserve. The important “ outside markets” were also bearish for the precious metals today, as the U.S. dollar index was higher and crude oil prices were lower. August Comex gold was last down $20.80 an ounce at $1,255.10. July Comex silver was last down $0.426 at $16.71 an ounce.

A batch of mixed U.S. economic data released Thursday morning did little to impact market prices.

The news reports late Wednesday that special prosecutor Robert Mueller will investigate U.S. President Donald Trump for obstruction of justice has thrown more uncertainty into the world marketplace. However, this development is not yet providing any support to safe-haven gold.

The Federal Reserve on Wednesday afternoon raised U.S. interest rates by 0.25%, as expected by most. The Fed said it will also fairly aggressively reduce its big balance sheet of government securities in the coming months. The FOMC statement also said U.S. inflationary pressures have eased a bit recently. However, Fed Chair Janet Yellen at her press conference sounded a more hawkish tone on inflation. After digesting the FOMC statement and Yellen’s remarks, the marketplace deemed this latest Fed meeting as more hawkish on U.S. monetary policy.

The gold market started to erode right after the FOMC statement early Wednesday afternoon, and continued to slide into the late afternoon after-hours U.S. trading. Those losses were extended in the U.S. day session Thursday.

The key “outside markets” on Thursday saw Nymex crude oil futures prices weaker following another bearish weekly U.S. energy stocks report Wednesday. The oil market bears have the solid overall near-term technical advantage as prices trade well below $50.00 a barrel. Meantime, the U.S. dollar index was solidly higher and is supported on the more hawkish Fed tone on U.S. monetary policy. The greenback bears still hold the overall near-term technical advantage.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, August gold futures bulls still have the slight overall near-term technical advantage but are fading badly and need to show fresh power soon. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,284.20. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,225.00. First resistance is seen at $1,260.00 and then at today’s high of $1,268.50. First support is seen at $1,250.00 and then at $1,240.00. Wyckoff’s Market Rating: 5.5

July silver bears have gained the overall near-term technical advantage as prices hit a three-week low overnight. The next upside price breakout objective is closing futures prices above solid technical resistance at last week’s high of $17.745 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the April low of $16.06. First resistance is seen at $17.00 and then at $17.215. Next support is seen at the overnight low of $16.25 and then at $16.06. Wyckoff's Market Rating: 4.0.