One Down - One to Go, As Precious Metals Continue to Slide

The first of two key events affecting financial markets this week, this month’s Federal Open Market Committee (FOMC) meeting, has just concluded. On Friday, the Department of Labor will release its jobs report, containing data about new jobs added in April. Based on a survey by Reuters, economists expect the April count to include 175,000 added jobs.

According to statements released immediately following the conclusion of today’s meeting, the Federal Reserve voted unanimously to maintain its key interest rate, the Fed funds rate, which is currently fixed between 0.75 and 1.00%. The Fed statement cited a sluggish economy which grew only 0.7% in the first quarter of 2017.

No Stealth Rate Hike
One topic devoid of any real details was balance sheet liquidation, the Fed’s plan to begin to liquidate some of its assets. This issue contains the greatest amount of uncertainty as such a move by the Fed would be the first ever occurrence, and as such, lacks any real quantifiable data to base analysis upon.

As reported by CNBC, “The FOMC did not address an issue of increasing concern in the market - its $4.5 trillion balance sheet on which it stores its bond portfolio. Fed officials have indicated that it will change its policy of reinvesting proceeds from its holdings, a move they say would be tantamount to a series of interest rate hikes. However, officials have not set forth a plan over how that will happen.”

Precious Metals Continue to Slide
Now in week two, lower pricing of precious metals continues across the board. The premium which had been factored into precious metal pricing due to geopolitical concerns in both North Korea, as well as an upcoming election in France, have slowly eroded from current pricing.

After reaching $1297 per ounce in mid-April, gold prices have drifted lower. As of 4:00 Eastern Standard Time, gold futures are off almost $18 at $1239.50, a loss of 1.38% today alone. Silver is currently trading $0.41 lower at $16.41, a loss of 2.44% on the day. 
Platinum and palladium have not been able to escape the sell-off either. Today alone, platinum is giving up $24.9 on the day, a net loss of 2.7%, and is currently trading at $903. Palladium is trading at $796 off $17.00, which is a net loss of over 2% on the day.
Based upon our current technical studies, major support in gold is at $1231. This price point is a 38% retracement of the range from the lows of this year to the yearly high. Silver effectively closed below the 61% retracement of the yearly range yesterday when it closed below 1685. Today’s dramatic sell-off moved silver pricing substantially below that price point, and the next level of support is the 78% retracement which is $16.38.

Wishing you as always, good trading,