Gold, silver gain a bit amid slightly tamer U.S. inflation data

(Kitco News) - Gold and silver prices are modestly up in midday U.S. trading Wednesday, in the wake of a U.S. inflation report that came in not as hot as the marketplace expected. Gold prices hit a four-week high and silver prices a five-week high today. October gold futures were last up $3.70 at $1,805.10. September Comex silver futures were last up $0.273 at $20.755 an ounce.

The U.S. consumer price index report for July came in at unchanged from June and up 8.5%, year-on-year. The report was expected to be up 8.7%, year-on-year, after a rise of 9.1% in the June report. Gold prices initially rallied to a four-week high on the news, as the U.S. dollar index dropped sharply and U.S. Treasury yields declined. However, bond yields then ticked back up. Meantime, the U.S. stock indexes rallied amid “risk-on” trading attitudes that also worked to push the safe-haven metals down from their higher levels. After having a bit of time to think about today’s CPI data, traders and investors reckoned that while the data was a bit tamer, it still suggests problematic price inflation that will probably keep the Federal Reserve on its aggressive path of tightening U.S. monetary policy. Thursday comes the producer price index report for July, seen up 0.2% from June and compares to the June report’s rise of 1.1% from May.

Global stock markets were mostly down overnight. In overnight news, China said it has stopped its military exercise around Taiwan, but now says it’s preparing for war. On the economic front, China said its consumer price inflation in July was up 2.7%, year-on-year, which is the highest rate in two years.

The key outside markets today see Nymex crude oil prices up and trading around $91.25 a barrel. The U.S. dollar index sharply lower and hit a four-week low today. The yield on the 10-year U.S. Treasury note is fetching around 2.7%.

Technically, October gold futures prices hit another four-week high today. The gold futures bears still have the slight overall near-term technical advantage. However, a fledgling price uptrend is in place on the daily bar chart to suggest more upside in the near term. Bulls’ next upside price objective is to produce a close above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at today’s high of $1,814.40 and then at 1,825.00. First support is seen at today’s low of $1,793.00 and then at Tuesday’s low of $1,788.50. Wyckoff's Market Rating: 4.5.

September silver futures prices hit a five-week high today and scored a bullish “outside day” up on the daily bar chart. The bears have the slight overall near-term technical advantage. However, prices are in a fledgling uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at today’s high of $20.83 and then at $21.00. Next support is seen at today’s low of $20.315 and then at $20.00. Wyckoff's Market Rating: 4.5.

September N.Y. copper closed up 665 points at 365.20 cents today. Prices closed near the session high, hit a five-week high and scored a bullish outside day up today. The copper bears have the slight overall near-term technical advantage. However, prices are trending up on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 385.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 340.00 cents. First resistance is seen at 370.00 cents and then at 375.00 cents. First support is seen at this week’s low of 353.15 cents and then at 350.00 cents. Wyckoff's Market Rating: 4.5.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com