Gold Sells Off After Hawkish FOMC Minutes

(Kitco News) - Gold prices were moderately lower and hit new daily lows in early afternoon action Wednesday,in the wake of a hawkish FOMC minutes report. Some normal profit taking by theshorter-term futures traders was featured, after recent good gains in gold andsilver. The markets in earlier U.S. trading were in pause modes after gold hita 3.5-month high overnight. Silver prices scored a five-week high today. February Comex gold was last down $6.30 an ounce at $1,309.80. March Comex silver waslast down $0.086 at $17.12 an ounce.

TheU.S. economic highlight Wednesday was the release of the minutes of the lastFederal Open Market Committee (FOMC) meeting held on Dec. 12-13. Traders parsedthe statement for clues on the direction and timing of U.S. monetary policy in2018-and deemed the minutes as favoring the hawkish camp on U.S. monetarypolicy. The members are still seeking a gradual rise in U.S. interest rates,with some members saying the new U.S. tax policy could raise GDP. Gold prices soldoff after the minutes were released at 2:00 p.m. EST. Other markets did not seesuch significant reactions to the minutes.

Worldstock markets were mostly firmer Wednesday. U.S. stock indexes were higher andhit record highs today. Such did somewhat limit the upside in the gold andsilver markets. Still, the ability of gold and silver prices to rally while thecompeting equities asset class is also rising, is impressive from the metalsbulls' perspective.

Tensionsin Iran are still on the front burner of the market place. Demonstrators inthat country are demanding an overthrow of the ruling government. Severalprotesters have been killed and the situation is not improving, according toreports. This matter is supporting the safe-haven gold and silver markets, aswell as the crude oil market.

Thekey outside markets on Wednesday saw the U.S. dollar index higher on acorrective bounce from recent strong selling pressure. Meantime, Nymex crude oil prices were solidly higher and hit another 2.5-year high above $61.00 abarrel. The Iran demonstrations are supporting the oil market.

Technically,Februarygold futures prices closed near mid-range today. The bulls have theoverall near-term technical advantage, amid a steep three-week-old uptrendbeing in place on the daily bar chart. Gold bulls' next upside near-term pricebreakout objective is to produce a close above solid technical resistance at $1,350.00.Bears' next near-term downside price breakout objective is pushing prices belowsolid technical support at $1,280.00. First resistance is seen at today's highof $1,323.00 and then at $1,225.00. First support is seen at this week's low of$1,304.60 and then at $1,300.00. Wyckoff's Market Rating: 6.0

Marchsilver futures prices closed nearer the session high today. The bulls have theslight overall near-term technical advantage. Prices are in a steepthree-week-old uptrend on the daily bar chart. Silver bulls' next upside pricebreakout objective is closing prices above solid technical resistance at $18.00an ounce. The next downside price breakout objective for the bears is closingprices below solid support at the October low of $16.435. First resistance isseen at $17.37 and then at $17.50. Next support is seen at this week's low of$16.985 and then at $16.75. Wyckoff's Market Rating: 5.5.

March N.Y. copper closed down 195 points at 325.90 cents today. Prices closed nearmid-range on profit taking after hitting a contract high last week. The copperbulls still have the solid overall near-term technical advantage. Copper bulls'next upside price objective is pushing and closing prices above solid technicalresistance at 340.00 cents. The next downside price objective for the bears isclosing prices below solid technical support at 310.00 cents. First resistanceis seen at today's high of 328.00 cents and then at the contract high of 332.20cents. First support is seen at today's low of 323.65 cents and then at 320.00cents. Wyckoff's Market Rating: 8.0.

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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