Gold erases some losses after as-expected FOMC statement

(Kitco News) - Gold and silver prices are moderately lower in early-afternoon U.S. trading Wednesday, but up from lower levels seen earlier today and just before this afternoon's FOMC statement that saw an expected hawkish Fed leaning but no big surprises. February gold did hit a two-month low in the immediate volatility after the FOMC statement, while March silver hit a 17-month low. February gold was last down $7.70 at $1,764.50 and March Comex silver was last down $0.199 at $21.71 an ounce.

The just-concluded U.S. Federal Reserve FOMC meeting's statement said that three interest rate increases are likely in 2022 and said U.S. inflation is rising but implied it will back off in the coming months. The FOMC statement said the Fed is accelerating its asset purchases tapering, which was expected. The statement also said that Fed officials remain concerned about the coronavirus and its impact on the global economy. Traders now await the press conference from Fed Chairman Jerome Powell. All of the major central banks hold monetary policy meetings yet this week.

Global stock markets were mixed in overnight trading. U.S. stock indexes are lower early this afternoon.

In other news there was a stark assessment of the Covid virus and resulting supply chain disruptions heading into the new year. Broker SP Angel in an email dispatch today warned that "we expect the highly transmissible Omicron virus to significantly disrupt supply chains through Q1 next year. Each new dominant variant passes faster and more effectively than the last by their very definition, with Omicron as the latest and most complex variant to take over. While Omicron may prove to be a milder and less deadly virus it is still making people sick and it still takes time / weeks to recover. …We expect ongoing mine disruption to further hit metals production, exacerbating supply / demand deficits and lowering already low LME and SHFE warehouse stock levels." Other major industries may suffer the same fate in the coming months.

The key "outside markets" today see Nymex crude oil prices lower and trading around $70.50 a barrel. The U.S. dollar index is higher this afternoon and added to earlier gains after the FOMC statement. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.46%, up just a bit after the Fed statement.

Technically, February gold futures bulls have lost their the slight overall near-term technical advantage as trading turns choppy and sideways trading. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,723.70. First resistance is seen at today's high of $1,774.30 and then at $1,785.00. First support is seen at today's low of $1,753.00 and then at $1,750.00. Wyckoff's Market Rating: 5.0

March silver futures prices hit another nine-week low today. The silver bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.00 and then at this week's high of $22.43. Next support is seen at today's low of $21.41 and then at $21.25. Wyckoff's Market Rating: 1.5.

March N.Y. copper closed down 805 points at 417.65 cents today. Prices closed nearer the session low today and hit a nine-week low. The copper bears have gained the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the December high of 439.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 397.05 cents. First resistance is seen at 420.00 cents and then at 425.00 cents. First support is seen at today's low of 411.95 cents and then at 410.00 cents. Wyckoff's Market Rating: 3.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitc