Gold steady, silver sinks sharply as FOMC meeting begins

(Kitco News) - Gold prices are near steady and silver dropped sharply to a nearly four-month low in midday U.S. trading Tuesday. Gold saw limited selling interest amid a drop in the U.S. dollar index on this day, but silver got no benefit. In focus is the two-day meeting of the Federal Reserve’s Open Market Committee (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. Inflation and economic growth prospects will be the hot topics traders and investors want to see the FOMC meeting address.

Some market watchers are buzzing about the prospects of slower U.S./global economic growth and rising inflation, which in the past has been called stagflation. The conclusion of the meeting Wednesday afternoon, including Fed Chairman Jay Powell’s press conference, is likely to cause some market gyrations. August gold futures were last up $0.40 at $1,799.60 and September Comex silver was last down $0.738 at $24.58 an ounce.

Global stock markets were mixed to weaker overnight. The U.S. stock indexes are lower at midday on profit taking. Overall risk sentiment remains generally upbeat at present, despite some worries about the pandemic flaring up in some countries, including the U.S. Solid corporate earnings reports are keeping equities prices elevated.

The marketplace is watching a meeting between U.S. and China officials this week, with  indications that the two nations remain wary of each other.

The key outside markets today see the U.S. dollar index lower but the index remains in a near-term price uptrend. Nymex crude oil futures prices are weaker and trading around $71.50 a barrel. The yield on the U.S. Treasury 10-year note is presently fetching 1.23%.

Technically, gold futures bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $1,835.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at Monday’s high of $1,812.00 and then at $1,825.00. First support is seen at today’s low of $1,792.80 and then at last week’s low of $1,789.10. Wyckoff's Market Rating: 5.0.

The silver bears have the solid overall near-term technical advantage and gained more power today. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at $25.58 an ounce. The next downside price objective for the bears is closing prices below solid support at the March low of $23.825. First resistance is seen at $25.00 and then at today’s high of $25.32. Next support is seen at today’s low of $24.515 and then at $24.25. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com