Gold, Silver Gain On Weaker Greenback, Tame U.S. Inflation Data, Safe-Haven Demand

(Kitco News) - Gold and silver prices are moderately higher in early-afternoon U.S. trading Thursday. The metals see upside support from a bit of safe-haven demand, a lower U.S. dollar index, a tame U.S. inflation report, and some short covering in the futures markets. June Comex gold futures were last up $6.90 an ounce at $1,319.80. July Comex silver was last up $0.191 at $16.73 an ounce.

The U.S. economic highlight today saw the consumer price index for April come in at up 0.2%, month-on-month and up 2.5%, year-on-year. The numbers were expected to come in up 0.3% from March, and up 2.5% at an annual rate. The “core” CPI rate, excluding food and energy, was up just 0.1% in April from March, and up 2.1%, year-on-year. The core rate rose 0.2% in the March report. Gold and silver prices moved higher after the release of this data, on ideas the Federal Reserve may not have to be so aggressive on raising U.S. interest rates, what with low inflationary expectations.

The overall marketplace is not seeing a significant reaction from renewed Syria-Israeli military action, as both sides conducted air strikes against the other the past 24 hours. The military action is being called the heaviest between the two countries in decades. It appears the Middle East has once again become a geopolitical flashpoint for the markets. At present this is just a mildly bullish element for safe-haven gold and silver, but it could become much more significantly bullish if the situation escalates.

Gains in gold and silver were mitigated by higher U.S. stock indexes today. The U.S. stock market bulls are regaining upside momentum, as equity traders and investors don’t see much risk aversion in the marketplace. Again, that could change in a hurry given recent developments in the Middle East.

The conclusion of the Bank of England’s regular monetary policy meeting today saw no change in U.K. interest rates, which was expected by the marketplace.

The “outside markets” today find Nymex crude oil prices modestly weaker on profit taking after hitting a new 3.5-year high overnight, and trading as high as $71.89 a barrel. The U.S. dollar index is lower at midday on profit taking after hitting a 4.5-month high Wednesday.

Technically, the gold bulls and bears are on a level overall near-term technical playing field. A close below major psychological support at $1,300.00 would open the door to a larger leg down in prices in the near term. However, right now it appears that strong support level will hold. A bullish weekly high close on Friday would give the bulls upside momentum to suggest a near-term market bottom is in place. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,340.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,323.40 and then at $1,330.00. First support is seen at today’s low of $1,310.60 and then at the May low of $1,302.30. Wyckoff's Market Rating: 5.0

Silver prices were nearer the session high and hit a three-week high in afternoon trading today. The silver bears still have the slight overall near-term technical advantage, but the bulls gained some upside momentum today, to suggest a near-term market bottom is in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at today’s high of $16.79 and then at $17.00. Next support is seen at today’s low of $16.50 and then at this week’s low of $16.335. Wyckoff's Market Rating: 4.5.

July N.Y. copper closed up 480 points at 310.55 cents today. Prices closed nearer the session high today. The copper bulls have regained the slight overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the April high of 321.80 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 295.85 cents. First resistance is seen at last week’s high of 312.15 cents and then at 315.00 cents. First support is seen at today’s low of 305.20 cents and then at this week’s low of 301.40 cents. Wyckoff's Market Rating: 5.5.