Gold, Silver Lose Some Altitude As U.S. Dollar Rebounds

(Kitco News) - Gold and silver prices are holding most of Wednesday afternoon’s and this morning’s solid gains, but have backed down a bit at midday Thursday as the U.S. dollar index has pushed higher and to its daily high. Gold today hit a nearly eight-month high, while silver prices pushed to a six-month high. April gold was last up $10.00 an ounce at $1,325.50. March Comex silver was last up $0.143 at $16.07 an ounce. 

Traders and investors Thursday were still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that concluded Wednesday afternoon. The FOMC statement contained no monetary policy changes but the FOMC members said they will now be patient on future Fed rate hikes due to muted inflationary pressures and some concerns about global economic growth. The statement also suggested the Fed will not be in such a hurry to further reduce its balance sheet of U.S. securities. Fed Chairman Jerome Powell said at his press conference that “the case for raising U.S. interest rates has weakened somewhat.” While no change in monetary policy was expected, the FOMC statement was deemed fully dovish on U.S. monetary policy. That’s bullish for raw commodities, including the precious metals.

U.S. and China high-level trade officials are meeting in Washington, D.C, with today scheduled to conclude the meetings. There is no consensus at all on any progress that may or may not be made at this week’s talks. Markets will react to any significant announcements coming out of the meeting.

The next big economic data point is Friday morning’s U.S. jobs report for January from the Labor Department. The key non-farm payrolls number is forecast to come in at up 170,000 in the month. Wednesday’s U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000 and hints that the Friday non-farm jobs number could come in stronger than expected.

The outside markets today see the U.S. dollar index trading higher on a rebound from this week’s selling pressure that pushed prices to a three-week low. Meantime, Nymex crude oil prices are higher, hit a nine-week high, and are trading around $55.00 a barrel.

Technically, the gold bulls have the firm overall near-term technical advantage and have gained power this week. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,330.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,323.40 and then at $1,330.00. First support is seen at the overnight low of $1,316.70 and then at $1,310.00. Wyckoff's Market Rating: 7.0

March silver futures bulls have the near-term technical advantage and have momentum on their side. A 2.5-month-old uptrend is in place on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.50. First resistance is seen at $16.25 and then at $16.50. Next support is seen at $15.825 and then at this week’s low of $15.61. Wyckoff's Market Rating: 6.5.