Gold holding moderate gains in wake of 0.75% Fed rate hike

(Kitco News) - Gold and silver prices are higher in early-afternoon U.S. trading Wednesday, in the wake of a more aggressive monetary policy tightening move from the Federal Reserve. Safe-haven buying amide keener uncertainty in the marketplace was featured today amid problematic price inflation that could begin to more seriously impact global financial markets. August gold futures were last up $6.20 at $1,819.70. July Comex silver futures were last up $0.461 at $21.42 an ounce.

The U.S. data point of the week saw the Federal Reserve’s FOMC meeting that began Tuesday morning and end Wednesday afternoon the Fed is raising U.S. interest rates by 0.75%. Markets showed little reaction to the more aggressive move by the FOMC, as it was not unexpected. Fed Chairman Jerome Powell will hold a press conference soon, as of this writing.

Also on the front burner of the marketplace at mid-week today saw an emergency meeting of European Central Bank. The governing council will "discuss current market conditions," said a report. The worry for policymakers is the rapid repricing of euro-zone financial assets since last week's scheduled ECB meeting, which indicated an interest rate hike in July. Italy, Spain and Greece have seen their government bond yields spike, as those are the weaker economies in the Euro zone. The marketplace is a bit spooked that dislocations in European bond markets could spread into a contagion. That’s bullish for the safe-haven gold and silver markets.

Global stock markets were mixed overnight. U.S. stock indexes are higher in afternoon trading. Trader and investor risk appetite is tepid at best at mid-week.

The key outside markets today see Nymex crude oil prices lower and trading around $117.25 a barrel. The U.S. dollar index is a bit weaker in afternoon trading. The yield on the 10-year U.S. Treasury note is fetching around 3.4%.

Technically, the August gold futures bears have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at this week’s high of $1,882.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at today’s high of $1,838.50 and then at $1,850.00. First support is seen at this week’s low of $1,806.10 and then at $1,800.00. Wyckoff's Market Rating: 3.0

July silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $22.565 an ounce. The next downside price objective for the bears is closing prices below solid support at the May low of $20.42. First resistance is seen at today’s high of $21.675 and then at $22.00. Next support is seen at $21.00 and then at this week’s low of $20.845. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com