Gold prices are again modestly lower in early U.S. trading Tuesday and hovering not far above Monday’s 10-month low. Bearish technical charts and trader and investor optimism have been working against the safe-haven metal for several weeks. February Comex gold was last down $4.30 an ounce at $1,161.50. March Comex silver was last down $0.022 at $17.165 an ounce.
The marketplace is awaiting what is arguably the most important economic event of the month: the U.S. Federal Reserve FOMC meeting, which begins Tuesday morning and ends Wednesday afternoon with a statement. Most believe the Fed will raise interest rates for the first time in a year. In fact, the Fed funds futures market shows a 100% chance the Fed will raise U.S. interest rates this week. With a Fed rate hike so fully expected, markets have mostly factored it into their price structures. Thus, don’t be surprised to see many markets show a “buy the rumor, sell the fact” scenario following the actual announcement of the Fed rate hike. In gold and silver markets’ case, it would be “sell the rumor, buy the fact.”
The key “outside markets” on Tuesday see Nymex crude oil prices trading firmer, on some follow-through strength after spiking to a 16-month high on Monday and then backing off the high by the close. The U.S. dollar index is trading modestly higher in early U.S. trading. The greenback bulls remain technically strong.
U.S. economic data due for release Tuesday is light and includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, and import and export price indexes.