Gold Sees Modest Gains After FOMC Minutes That Pressure U.S. Dollar Index

(Kitco News) - Gold prices saw a bit a delayed bullish reaction to the Wednesday afternoon releaseof the latest minutes from the Federal Open Market Committee meeting. However,when the U.S. dollar index started to erode shortly after the minutes’ release,gold prices proceeded to rally to their daily highs. Gold prices have sincebacked down a bit from their daily highs. Some bargain hunters in gold andsilver also stepped in today to buy the price dips after the two metals postedsolid down days on Tuesday. April Comex gold futures were last up $2.70 anounce at $1,334.20. March Comex silver was last up $0.222 at $16.66 an ounce.

TheFOMC minutes said stronger-than expected U.S. economic growth in recent weeksis keeping the Federal Reserve on pace to keep gradually raising U.S. interestrates. The January meeting minutes also said the Fed expects annual U.S.inflation to continue to creep up, and to reach the Fed’s target of around 2%annual inflation this year. However, some FOMC members questioned whether U.S.inflation would reach the 2.0% annual level this year.

TheU.S. dollar index sold off on the news, even though it can be argued the FOMCminutes contained elements that could be perceived as both dovish and hawkishon U.S. monetary policy. U.S. stock indexes rallied in the wake of the FOMCminutes’ release.

Keepin mind the last FOMC meeting occurred before the big increase in volatility inthe stock markets and was the last meeting overseen by former Fed Chair JanetYellen.

Theother key outside markets on Wednesday saw Nymex crude oil prices slightlyweaker in afternoon trading and trading just below $62.00 a barrel.

Technically,Aprilgold futures prices were nearer the daily high in afternoon trading. Noserious chart damage was inflicted with Tuesday’s big downturn. The gold bullsstill have the overall near-term technical advantage. Gold bulls' next upsidenear-term price breakout objective is to produce a close above solid technicalresistance at the January high of $1,370.50. Bears' next near-term downsideprice breakout objective is pushing prices below solid technical support at theFebruary low of $1,309.00. First resistance is seen at $1,350.00 and then atthis week’s high of $1,354.00. First support is seen at today’s low of$1,326.80 and then at $1,320.00. Wyckoff's Market Rating: 6.5

March silver futures prices were nearer the session high and scoring a bullish“outside day” up on the daily bar chart. The silver bears have the slightoverall near-term technical advantage. Silver bulls' next upside price breakoutobjective is closing prices above solid technical resistance at $17.00 anounce. The next downside price breakout objective for the bears is closingprices below solid support at $16.00. First resistance is seen at last week’shigh of $16.95 and then at $17.00. Next support is seen at $16.50 and then attoday’s low of $16.34. Wyckoff's Market Rating: 4.5.

March N.Y. copper closed up 350 points at 322.60 cents today. Prices closed near thesession high. The copper bulls have the firm overall near-term technicaladvantage. Copper bulls' next upside price objective is pushing and closingprices above solid technical resistance at the December high of 323.65 cents.The next downside price objective for the bears is closing prices below solidtechnical support at the February low of 302.60 cents. First resistance is seenat this week’s high of 324.60 cents and then at last week’s high of 327.20cents. First support is seen 320.00 cents and then at today’s low of 316.40cents. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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