Gold, silver prices rise steadily as Powell's stance loosens

Gold and silver prices moved sharply higher in early U.S. trading Wednesday following dovish comments from Federal Reserve Chairman Jerome Powell. Spot gold rose $29.90, or 1.28%, to $2,359.05. Spot silver rose $1.017, or 3.45%, to $30.510.

Federal Reserve Chairman Jerome Powell softened his tone on U.S. monetary policy in a speech at the European Central Bank conference in Portugal on Tuesday, and many markets, including precious metals and U.S. stocks, softened. "Powell delivered a fairly dovish speech with the theme that the U.S. central bank is making progress in reducing inflation," said Angus Campbell, an analyst at Trade Nation. "But he went on to say that he needs to see more evidence that inflation is moving sustainably toward the 2% target before he's comfortable easing monetary policy. Still, markets see a strong chance of two 25 basis point rate cuts by the end of the year." The Wall Street Journal's headline today reads: "Powell Reconsiders Rate Cuts."

Wednesday is a very busy day for U.S. economic data releases, including the weekly MBA mortgage applications survey, the ADP national employment report, the Challenger layoffs report, the weekly unemployment claims, the international trade report, the ISM business services report, the U.S. services PMI, the global services PMI, manufacturers' shipments and inventories, the U.S. Department of Energy's weekly report on liquid energy stocks, and the minutes of the Federal Open Market Committee.

Indices in Asia and Europe were mixed, but mostly firmed overnight. Stocks opened lower in New York after the S&P 500 and Nasdaq closed at record highs on Tuesday. Some markets closed early today due to the U.S. Independence Day holiday on Thursday, when all U.S. markets were closed.

In overnight news, the Eurozone Producer Price Index fell 0.2% month-over-month and 4.2% year-over-year in May. These figures were close to market expectations.

The UK will hold a general election on Thursday, which some consider to be the most important in years. In the external markets, the U.S. dollar index fell slightly and crude oil prices on the New York Mercantile Exchange were close to stable, trading around $82.75 per barrel. The benchmark 10-year U.S. Treasury yield is currently 4.43%.

Technically, spot gold bulls have the overall technical advantage in the near term. The next upside price objective for the bulls is a solid close above the June high of $2,406.70. The next short-term downside price objective for the bears is pushing gold prices below technical support at $2,300.00. The first resistance level is seen at $2,375 and then at $2,382.60. The first support level is seen at $2,350 and then at the overnight support low of $2,335.70.

Spot silver futures bulls have the overall near-term technical advantage and have regained upside momentum. Silver bulls' next upside breakout objective is closing prices above technical resistance at $32.00. Bears' next downside breakout objective is closing prices below support at the June low of $28.90. First resistance is seen at $31.00 and then at $31.225. Next support is seen at $30.50 and then at $30.00.