Gold rally loses steam as Powell warns inflation fight far from over
Gold prices are slightly higher but off daily highs in afternoon U.S. trading Tuesday. The gold and silver markets got a brief lift and hit daily highs by a speech from Federal Reserve Chairman Jerome Powell, in which he initially produced no surprises on U.S. monetary policy. However, at the end of his speech he warned that more strong U.S. economic data may force the Fed to remain hawkish for longer—prompting the precious metals prices to back off their highs. April gold was last up $1.90 at $1,881.40 and March silver was down $0.102 at $22.14.
The focal point of the marketplace today was a midday speech to an economics club in Washington, D.C. by Fed Chairman Powell. Powell reiterated that U.S. inflation has started to come down but has a long way to go to meet the Fed's inflation objectives. Powell was pressed on last Friday's strong jobs report possibly changing Fed policy to more hawkish, but Powell brushed that notion off, at first. However, at the end of his remarks he said more strong U.S. economic data could force the Fed to raise rates more than it expects at present. Traders and investors were extra anxious to see what Powell had to say after last week's surprisingly strong U.S. jobs report that many believe could indeed force the Fed to remain hawkish on U.S. monetary policy for longer.
Global stock markets were mixed overnight. U.S. stock indexes are mixed in afternoon trading and have lost the gains seen when Powell began his speech.
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The key outside markets see the U.S. dollar index modestly lower and but up from its daily low that came after Powell started speaking. The yield on the benchmark U.S. 10-year Treasury note is presently fetching around 3.63%. Meantime, Nymex crude oil futures prices are solidly up and trading around $76.50 a barrel.
Technically, April gold futures prices hit a four-week low Monday and saw short covering today. Bulls still have the overall near-term technical advantage. However, a three-month-old uptrend on the daily bar chart has been negated, to suggest a near-term market top is in place. Bulls' next upside price objective is to produce a close above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,900.00 and then at $1,915.50. First support is seen at this week's low of $1,873.20 and then at $1,850.00. Wyckoff's Market Rating: 6.5
March silver futures prices hit a two-month low early on today. The silver bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. Prices have seen a bearish downside "breakout" from a sideways trading range at higher levels. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.50. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at this week's high of $22.635 and then at $23.00. Next support is seen at today's low of $22.125 and then at $22.00. Wyckoff's Market Rating: 5.5.
March N.Y. copper closed up 275 points at 406.10 cents today. Prices closed nearer the session high. The copper bulls have the overall near-term technical advantage but are fading. A four-month-old uptrend on the daily bar chart has been at least temporarily negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 435.50 cents. The next downside price objective for the bears is closing prices below solid technical support at 380.00 cents. First resistance is seen at 410.00 cents and then at 420.00 cents. First support is seen at this week's low of 399.30 cents and then at 390.00 cents. Wyckoff's Market Rating: 6.5.
By Jim Wyckoff
For Kitco News
David