Gold and silver futures prices are sharply lower in early U.S. trading Thursday, in the wake of a surprisingly hawkish lean by the Federal Reserve on its monetary policy. Sharp gains in the U.S. dollar index and lower crude oil prices today are also bearish outside-market forces working against the precious metals market bulls. August gold was last down $119.60 at $4,262.10. July silver prices were last down $3.897 at $65.875.
“Traders piled into betting on interest-rate hikes as soon as next month after Kevin Warsh used his debut press conference as Federal Reserve chairman to make clear the central bank won’t tolerate high inflation,” said a Bloomberg report. U.S. Treasury yields rose after the FOMC meeting and Warsh’s press conference Wednesday afternoon. “The hawkish message was driven home by the projections of individual Fed members, half of whom expect to raise rates by the end of the year. Before Wednesday’s FOMC conclusion, Wall Street had largely assumed the Fed was done cutting U.S. interest rates amid the U.S.- Iran war’s oil shock that sent consumer prices surging by the most in three years. “But investors also wondered whether Warsh would give in to President Trump, who elevated him to the central bank post after repeatedly lashing out at his predecessor, Jerome Powell, for not slashing borrowing costs enough. Both questions appeared to be settled — at least for now — after Warsh spoke Wednesday,” said the Bloomberg report.
U.S.-Iran sign initial peace deal. President Trump and Iran's Masoud Pezeshkian signed an initial deal to end the Middle East war. As part of the 14-point memo, further talks to reach a final agreement will take place over the next 60 days, during which the Strait of Hormuz reopens. Ships are already starting to sail through the Strait. Also included in the deal is a $300 billion plan for Iran's "reconstruction" but key questions around its nuclear program remain. An official signing ceremony, with U.S. and Iranian representatives, had been scheduled to take place in Switzerland on Friday but now it's not clear if this will still happen. Trump signed the so-called memorandum of understanding at the Palace of Versailles near Paris on Wednesday evening, at the end of a Group of Seven summit. He was flanked by world and business leaders, including French President Emmanuel Macron. “Oil down,” Trump immediately said.
Average U.S. gasoline price now below $4 a gallon… U.S. gasoline prices have dipped below $4 a gallon for the first time since March, providing welcome relief to consumers. The swing down in prices comes as the U.S. and Iran signed an interim deal to end the war and reopen the Strait of Hormuz, and due to a decline in global crude prices. Prices are still well above where they stood before the war and aren’t expected to return to those levels until next year, experts say.
The key outside markets today see the U.S. dollar index solidly higher and hitting a 2.5-month high, while Nymex WTI crude oil prices are lower, hit a three-month low overnight and are trading around $75.50 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.45%.
Technically, August gold futures prices are trending down on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $4,500.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,000.00. First resistance is seen at the overnight high of $4,350.20 and then at this week’s high of $4,403.60. First support is seen at this week’s low of $4,237.40 and then at $4,200.00. Wyckoff's Market Rating: 3.0
July silver futures bulls see their next upside price objective for the bulls is closing prices above solid technical resistance at $75.00. The next downside price objective for the bears is closing prices below solid support at $60.00. First resistance is seen at $70.00 and then at this week’s high of $71.40. Next support is seen at $65.00 and then at $63.00. Wyckoff's Market Rating: 2.5
