Gold soars to all-time high, biggest daily dollar gain ever

Gold and silver markets have shown no significant price reactions in the immediate aftermath of the Federal Reserve’s two-day Open Market Committee (FOMC) meeting that began Tuesday morning ended this afternoon with the Fed keeping U.S. interest rates steady, at 3.5% to 3.75%, as expected, and after three successive quarter-point rate cuts. The FOMC statement said the U.S. unemployment rate has stabilized and that the U.S. economy has expanded at a solid pace. However, the statement said U.S. jobs gains have been low and inflation remains somewhat elevated. Traders are now awaiting Fed Chairman Powell’s remarks at his press conference, which will be closely parsed by the marketplace for any clues regarding the trajectory of monetary policy in the coming months, including Fed officials’ further comments on inflation.

CME Group is raising margins on Comex silver futures after prices surged to a record high this week. Margins will rise to 11% of so-called notional from the current 9% for non-heightened risk profile, the exchange said in a statement on Tuesday. The heightened risk profile margins will be raised to 12.1% from the current 9.9%, it said. Platinum and palladium futures’ margin also will be hiked. The change takes effect from Wednesday’s close and follows a “normal review of market volatility to ensure adequate collateral coverage,” the CME said.

The U.S. dollar index on Tuesday hit a four-year low and suffered its steepest one-day drop since last year’s tariff rollout after President Trump said on Tuesday afternoon he didn’t think the currency had weakened excessively.  “This may very well be the beginning of the next leg lower in the dollar, and many may not be prepared for it,” said Stephen Jen, a former Morgan Stanley currency analyst, and as reported by Bloomberg. “There has been a generation of currency analysts accustomed to dealing with a strong dollar and a strong U.S. economy, and unable to process the scenario of a weakening dollar and a strong U.S. economy.” The U.S. dollar’s recent decline is great for U.S. businesses, Trump told reporters in Iowa. While that’s in line with previous commentary from U.S. officials, his remarks moved currency markets late Tuesday, partly because they appeared to validate the steep decline in the greenback in recent sessions. Gold rallied to another record high overnight, at $5,345.00 an ounce, basis April Comex futures, supported in part by the slumping U.S. dollar index.

The key outside markets today see crude oil prices up a bit and trading around $62.75 a barrel. The U.S. dollar index is higher, on a corrective bounce, and the U.S. 10-year Treasury note yield is presently around 4.263%.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Technically, April gold futures bulls’ next upside price objective is to produce a close above solid resistance at $5,500.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $5,000.00. First resistance is seen at today’s record high of $5,360.60 and then at $5,400.00. First support is seen at $5,250.00 and then at $5,200.00. Wyckoff's Market Rating: 10.0.

March silver futures bulls have the strong chart advantage and their next upside price objective is closing prices above solid technical resistance at $125.00. The next downside price objective for the bears is closing prices below solid support at $100.00. First resistance is seen at today’s high of $116.165 and then at the record high of $117.70. Next support is seen at $110.00 and then at $107.50. Wyckoff's Market Rating: 9.5.