Gold Futures Market Update: Tuesday, February 18, 2024
Gold Futures Market Tuesday, February 18, 2024
Gold futures held steady on Tuesday as investors awaited the minutes of the last U.S. Federal Reserve policy meeting for more clues on its interest rate cut timing. Spot gold was up 0.5% at $2,027.19 per ounce, while U.S. gold futures settled 0.8% higher at $2,039.8. The dollar index was down 0.2%, making greenback-priced bullion less expensive for overseas buyers.
The minutes from the U.S. central bankâs January policy meeting are due on Wednesday. âWe continue to see the likelihood that the Fed will lower rates by mid 2024,â said David Meger, director of metals trading at High Ridge Futures. However, the Fed minutes will reiterate that rate cuts are going to be pushed back until May or June, which is certainly not going to help the gold market, Meger said, adding there is fundamental support below the $2,000 level.
Lower interest rates boost the appeal of non-yielding gold. Hotter-than-expected U.S. consumer prices and producer prices data last week reduced hopes for a rate cut in March. Markets are currently pricing a 78% chance of a cut in June, according to the CME Fed Watch Tool.
âStrong physical market buying activity has kept (gold) prices from weakening,â analysts at TD Securities wrote in a note. âAt a certain price, silver will always make its way to market, but the outlook for physical demand suggests that higher prices will be necessary to satisfy the ongoing period of structural deficits.â
Spot silver was up 0.2% at $23.06 per ounce. Spot platinum gained 0.6% to $904.15 per ounce and palladium rose 2.8% to $980.14.
Gold prices are posting decent gains in midday U.S. trading Tuesday, while silver prices are lower. The yellow metal is getting a lift due to China dropping key interest rates for mortgages in an effort to jumpstart its troubled housing/property sector. That could translate into better demand for metals, down the road, from the worldâs second largest economy.
Also, a weaker U.S. dollar index and a dip in U.S. Treasury yields to start the U.S. trading week are helping out the gold market bulls. April gold was last up $14.30 at $2,038.20. March silver was last down $0.38 at $23.095. Asian and European stock markets were mixed to lower in overnight trading. U.S. stock index futures are lower at midday.
It will be a busy week for U.S. corporate earnings reports. Traders are also looking forward to Wednesday afternoonâs release of the minutes from the last FOMC meeting of the Federal Reserve. Recent warmer U.S. inflation reports have the marketplace thinking the Fed will hold off on lower interest rates until the second half of the year, if even then.
The other key outside market today sees Nymex crude oil prices a bit weaker and trading around $79.00 a barrel. The yield on the benchmark 10 year U.S. Treasury note is presently fetching around 4.27%.
Technically, April gold futures saw more short covering and bargain hunting featured today. The bears still have the slight overall near term technical advantage. Prices are in a 2.5 month old downtrend on the daily bar chart. Bullsâ next upside price objective is to produce a close above solid resistance at the February high of $2,083.20. Bears' next near term downside price objective is pushing futures prices below solid technical support at the November low of $1,975.10.
First resistance is seen at todayâs high of $2,042.70 and then at $2,050.00. First support is seen at todayâs low of $2,023.90 and then at last Fridayâs low of $2,006.60. Wyckoff's Market Rating: 4.5.
March silver futures bears still have the slight overall near term technical advantage. However, a nine week old downtrend on the daily bar chart has been negated to suggest a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.50. The next downside price objective for the bears is closing prices below $23.50.
