Gold backs down as Powell reiterates hawkish Federal Reserve

Gold prices are lower in midday U.S. trading Thursday, pressured by comments from Federal Reserve Chairman Jerome Powell that again leaned hawkish on U.S. monetary policy. Powell’s comments boosted the U.S. dollar index and U.S. Treasury yields, both of which had been weaker ahead of his speech. The yellow metal had seen higher prices overnight, but lost those gains to trade near steady when upbeat U.S. jobless claims data were released, and then sold off when Powell made his remarks. October gold was last down $10.80 at $1,707.40 and December silver was up $0.065 at $18.325.

Powell’s speech today was the last scheduled ahead of the FOMC meeting on Sept. 20-21, at which time the Fed is expected to raise the Fed Funds rate by 75 basis points. The Fed’s beige book, out Wednesday afternoon, pointed out weaker U.S. economic growth. Meantime, the European Central Bank met today and raised its main interest rate by 75 basis points, as expected.

U.S. stock indexes are higher at midday, and recouped early losses that occurred shortly after Powell’s hawkish monetary policy comments in a discussion with the Cato Institute. Global stock markets were mostly firmer overnight, following the strong gains in the U.S. stock market on Wednesday.

Brace for a possible U.S. debt crisis if inflation stays elevated, democracy itself is at risk - Michael Gayed

The key outside markets today see Nymex crude oil prices higher on a corrective rebound and trading around $83.50 a barrel after hitting an eight-month low overnight. The U.S. dollar index is firmer after hitting a 20-year high Wednesday. The yield on the 10-year U.S. Treasury note is fetching 3.292%.

Technically, October gold futures bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at today’s high of $1,729.30 and then at $1,740.00. First support is seen at $1,700.00 and then at $1,686.30. Wyckoff's Market Rating: 2.0.

December 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 $19.50. The next downside price objective for the bears is closing prices below solid support at $17.00. First resistance is seen at today’s high of $18.665 and then at $19.00. Next support is seen at $18.00 and then at this week’s low of $17.74. Wyckoff's Market Rating: 2.0.

December N.Y. copper closed up 800 points at 351.10 cents today. Prices closed near the session high 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 the August high of 378.35 cents. The next downside price objective for the bears is closing prices below solid technical support at the July low of 315.55 cents. First resistance is seen at 355.00 cents and then at 360.00 cents. First support is seen at today’s low of 344.20 cents and then at this week’s low of 336.10 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips