Fed Chairman Powell takes a hawkish stance, while gold is sold after some gains. In what could be one of the most important trading days of the year, gold and silver prices were lower in US trading mid-Tuesday. Gold is losing its early gains when Fed Chairman Jerome Powell has “misstepped” the market, arguing that a tighter U.S. currency is needed. Detail Cryptocoin. com
Gold declines with Fed effect
The US dollar index retraced most of its sharp and early losses on Powell’s comments, which meant bearish for the metals. In addition, Nymex crude oil prices fell to a three-month low of $65.65 as of writing and were also negative for the metals and crude commodities sector. February gold was last trading at $1,771.50, down $13.90, while March Comex silver was down $0.082 at $22.77 an ounce. Traders and investors watched very closely the comments from Senate Powell and Secretary of the Treasury Janet Yellen today, especially in light of the new Omicron scare. Powell said the Fed’s monthly US bond-buying program should be reduced sooner. Powell seemed less concerned about the demand side of economies during any spike in the Omicron wave. He also hinted that new monetary stimulus programs will have limited positive effects on economies if new types of COVID-19 continue to evolve.
US stock market sold hard on Powell’s statements. Over the past decade, the US stock market has soared with the Fed’s easy money policies that have eclipsed other market fundamentals regarding stock prices. What metals traders are most worried about today is a tighter US monetary policy that curbs rising inflation, which has historically been bullish for fixed assets, including metals. U.S. Treasury bond markets saw lower yields today, suggesting that bond market traders think the Fed will sooner or later get inflation under control.
Status of global markets
Global stock markets are down in overnight trading. It’s a matter of debate about the new Omicron wave of the coronavirus, how effective existing vaccines are at fighting it. Regeneron said Tuesday morning that the antibody drug had less effect on the Omicron wave. Moderna said the many mutations of Omicron indicate that a new vaccine will be needed. In other overnight news, the euro zone’s November consumer price index is 4% year-on-year for a 30-year high. It came in high with an increase of 9. Energy prices increased by 27.4% year-on-year. We see Nymex crude oil prices falling sharply, hitting a three-month low and trading around $65.75 a barrel. Meanwhile, the yield on the U.S. Treasury 10-year note is currently bringing in 1.443 percent, which is 1% as revealed on Monday. It is considerably lower than 529. US economic data to be released Tuesday includes weekly Johnson Redbook and chain store retail sales reports, the S&P/Case-Shiller home price index, the ISM Chicago business survey and the consumer confidence index.
Technically, gold prices for February delivery hit a three-week low and recorded a big, bearish day on the daily bar chart. The bulls have generally lost their short-term technical advantage. The two-month uptrend has stopped on the daily bar chart. The bulls’ next upside price target is to produce a close above solid resistance at $1,840.00. The bears’ next short-term bearish price target is to set futures prices at 1,761. It pushes below solid technical support at $100. Initial resistance 1.785. It appears at $00 followed by $1,800.00. Initial support is seen at $1,761.00 followed by $1,750.00.
March silver futures prices hit a six-week low today. Silver bears give the firm an overall short-term technical advantage. Prices are trending down again on the daily bar chart. The silver bulls’ next upside price target is to close prices above solid technical resistance at $25.00 an ounce. The next downside price target for the bears is to close prices below solid support at the September low of $21.46. Initial resistance is seen at this week’s high at $23.46, followed by last Friday’s high at $23.77. The next support is seen at $22.50, followed by $22.40.