Gold Slightly Lower as Market Place Awaits FOMC Results

www.cfb.ae

Gold prices are slightly lower in early U.S. trading Wednesday, on some mild profit taking and a corrective pullback from current gains that pushed prices to a three-week high on Tuesday. The entire market place is on hold, awaiting the results of Wednesday’s U.S. FOMC meeting. April Comex gold last traded down $3.30 at $1,608.00 an ounce. Spot gold was last quoted down $3.80 at $1,609.50.  May Comex silver last traded up $0.042 at $28.885 an ounce.

Attention of the market place at mid-week has turned to the Federal Open Market Committee monetary policy meeting of the U.S. Federal Reserve, which started Tuesday and ends Wednesday at midday. Fed Chairman Ben Bernanke will hold a press conference following the meeting’s conclusion Wednesday afternoon. Better U.S. economic data released recently has the commodity market bulls worried the Fed could start to tap the brakes on its very accommodative monetary policies of the past few years. The markets could see immediate and significant price reactions to the conclusion of the FOMC confab, if recent history repeats itself.

The controversial European Union/International Monetary Fund bailout package for Cyprus unveiled over the weekend that included taxing savings accounts in domestic banks is still on the front burner of the market place at mid-week. However, from a markets perspective the situation has de-escalated since Monday morning.  European stocks were higher and the Euro currency was firmer overnight. The Cypriot finance minister reportedly had “constructive” talks with his Russian counterpart on Wednesday. Late Tuesday the Cyprus parliament voted down the EU/IMF bailout measure that included the controversial savings account tax. The market place was also somewhat assuaged by the European Central Bank announcing late Tuesday that it would provide liquidity, “within the rules,” to the Cyprus financial system. Still, Cyprus banks remained closed this week amid the confusion. An auction of German 10-year bunds Wednesday produced the lowest yield since last July, which underscores the keener risk aversion in the market place this week.

The U.S. dollar index is trading near weaker early Wednesday, on a corrective pullback and some profit taking from recent gains that saw prices Tuesday hit a fresh 7.5-month high. The U.S. dollar bulls continue to hold the overall technical advantage. Meantime, Nymex crude oil futures prices are higher Wednesday. The crude oil bulls have the slight near-term technical advantage at present. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE energy stocks report, and the FOMC statement.

The London A.M. gold fixing is $1,611.50 versus the previous London P.M. fixing of $1,610.75.

Technically, gold futures bulls have gained some fresh upside near-term technical momentum recently to begin to suggest a near-term market bottom is in place. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,619.70. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,575.00. First resistance is seen at Tuesday’s high of $1,615.00 and then at $1,619.70. First support is seen at $1,600.00 and then at this week’s low of $1,589.60.

May silver futures bears have the overall near-term technical advantage, but prices have also been trading sideways and choppy for nearly four weeks as the bulls have stabilized the market. This price action could be “basing” at lower price levels that can put in market bottoms and eventually kicks off price uptrends. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.495 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $27.925. First resistance is seen at this week’s high of $29.11 and then at last week’s high of $29.35. Next support is seen at last week’s low of $28.53 and then at the February low of $28.315.

Contact Us:

Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website:  www.cfb.aeHere are some useful links that you can follow:

Here is a CFB blog that gives useful daily trade advice... http://century-financial-brokers-uae.blogspot.ae/

You can also follow CFB on facebook (useful advice on posts regularly)

Here is another blog that provides regular news and information and is very useful to stay updated 
on the markets...  http://centuryfinancialbroker.wordpress.com/