Gold, silver higher following as-expected Fed rate hike

(Kitco News) - Gold and silver prices are higher and hit daily highs in afternoon U.S. dealings Wednesday, in the immediate aftermath of an interest rate increase from the Federal Reserve that was widely expected. June gold was last up $14.00 at $2,037.50 and July silver was up $0.126 at $25.76.

The just concluded U.S. Federal Reserve Open Market Committee (FOMC) meeting saw the Fed raise the Fed funds rate range by 0.25%, to 5.00 to 5.25%, as expected. The FOMC statement signaled the committee will likely pause in its rate-hiking cycle. The rate hike move was unanimously agreed upon by the committee. The statement said the U.S. economy continues to grow modestly, but the tighter bank credit conditions are likely to weigh on the economy. Some market watchers are calling todays’ FOMC statement “a hawkish pause.” Traders now await the press conference from Fed Chairman Jerome Powell.  

The European Central Bank meets Thursday. The ECB is also expected to raise its main interest rate by a quarter-point.  

The marketplace is now looking forward to Friday’s April U.S. jobs report from the Labor Department. The key non-farm payrolls number is forecast to come in at up 180,000 versus a rise of 236,000 in the March report. The U.S. ADP national employment report came in strong, showing 296,000 jobs were created in April, almost double the forecast, and compares to a revised March reading of 142,000 jobs created. However, the manufacturing sector lost 38,000 jobs. 

Global stock markets were mixed to higher overnight. U.S. stock indexes are mixed in afternoon trading. Risk aversion has up-ticked at mid-week, following solid losses in the U.S. stock market Tuesday, led by banking shares. After a period of calm, there are renewed worries about the U.S. banking sector, especially regional banks, whose shares dropped sharply Tuesday. Also, U.S. Treasury Secretary Janet Yellen has warned the U.S. government could be in default on some of its payments by June 1 if the debt limit is not increased. President Biden will meet congressional leaders at the White House next week to discuss the matter.

Another feature in the marketplace this week is plunging crude oil prices that hit a five-week low overnight. Concerns about slowing global economic growth have hit the crude oil market hard. Nymex crude is presently down over $3.00 on the day and trading at $69.55 a barrel. Nymex crude is presently down around $15 a barrel from the April high.

The other key outside markets today see the U.S. dollar index solidly lower and losing ground after the FOMC statement. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.386%. Treasury yields have dipped this week on flight-to-quality buying amid the wobbly U.S. banking stocks.

Technically, June gold futures prices hit a three-week high today. Bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the April high of $2,063.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the April low of $1,965.90. First resistance is seen at $2,050.00 and then at $2,063.40. First support is seen at today’s low of $2,016.00 and then at $2,000.00. Wyckoff's Market Rating: 8.0

July silver futures bulls have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.435. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $26.00 and then at this week’s high of $26.21. Next support is seen at today’s low of $25.355 and then at $25.00. Wyckoff's Market Rating: 7.5.

July N.Y. copper closed down 180 points at 384.45 cents today. Prices closed nearer the session low and closed at a four-month-low close today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 408.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 372.45 cents. First resistance is seen at Tuesday’s high of 395.30 cents and then at this week’s high of 400.50 cents. First support is seen at the April low of 381.65 cents and then at 380.00 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com