Gold, silver uptick after FOMC statement points to rising inflation

(Kitco News) - Gold and silver prices are moderately higher in early-afternoon U.S. trading Wednesday, and have rallied in the wake of the just-released FOMC minutes that said the U.S. economy is pointed toward higher growth and inflation prospects this year. A sell off in the U.S. dollar index, post-FOMC statement, is also supportive for the metals markets. April gold futures were last up $7.50 at $1,738.50 and May Comex silver was last up $0.227 at $26.21 an ounce.

Traders at mid-week are squarely focused on the Federal Reserve's two-day Open Market Committee (FOMC) meeting that began Tuesday morning and ended Wednesday afternoon with a statement and new U.S. economic projections. The FOMC statement said U.S. monetary policy has not changed, as expected (Fed funds rate seen at median 0.1% until the end of 2023.), but added U.S. economic growth and inflation prospects are picking up steam. The Fed raised its U.S. GDP projection to 6.5% growth in 2021, from 4.2%, and sees inflation at 2.4% annually in 2021, versus its last estimate of up 1.8%. The central bank said it will continue its present bond-buying program (quantitative easing) until substantial further progress is made on the Fed's economic goals. Now, traders are awaiting the press conference from Fed Chairman Jerome Powell. Traders will be closely scrutinizing the Powell's comments regarding U.S. and global economic growth and inflation prospects.

Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are firmer in afternoon dealings and were boosted by the dovishly perceived FOMC statement. U.S. Treasury bond yields are on the rise again and that is giving stock markets pause. The U.S. Treasury 10-year Treasury note is presently yielding 1.669%--the highest level in 13 months.

An inflation reading coming out of the Euro Zone today continues to show very tame prices. The February consumer price index came in up 0.2% from January and up 0.9%, year-on-year. Those numbers were in line with market expectations.

The key "outside markets" today see Nymex crude oil futures prices lower and trading around $64.50 a barrel. Meantime, the U.S. dollar index is lower and near its daily low.

Technically, the April gold futures bears have the firm overall near-term technical advantage amid a nine-week-old price downtrend in place on the daily chart. Bulls' next upside price objective is to produce a close in April futures above solid resistance at $1,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,673.30. First resistance is seen at $1,750.00 and then at $1,760.00. First support is seen at this week's low of $1,719.20 and then at $1,700.00. Wyckoff's Market Rating: 3.0

May silver futures bears have the slight overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.50 an ounce. The next downside price objective for the bears is closing prices below solid support at the March low of $24.845. First resistance is seen at last week's high of $26.545 and then at $27.00. Next support is seen at today's low of $25.805 and then at $25.425. Wyckoff's Market Rating: 4.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com