Gold Prices Hit 4-Mo. High, But Hotter CPI Tempers Gains
(Kitco News) - Gold prices are moderately higher in early U.S. trading Friday, but off the overnight gains that notched a four-month high. U.S. consumer price inflation that was a bit higher than expected helped to pull the gold market off its overnight highs. However, gold and silver prices are being supported by a slumping U.S. dollar index and a surging Euro currency. February Comex gold was last up $5.90 an ounce at $1,328.30. March Comex silver was last up $0.124 at $17.09 an ounce.
The highlight of a busy day for U.S. economic data was the release of the consumer price index for December. The overall CPI was up 0.1%, which was in line with expectations. However, the core rate—minus food and energy prices—came in at up 0.3%, which was a bit higher than the up 0.2% that was expected. Gold prices backed off right after the release of the CPI data, which falls into the camp of the U.S. monetary policy hawks, who want to see interest rates rise at a faster clip.
December U.S. retail sales data was also released this morning, coming in at up 0.4%, which was in line with trade expectations.
Other U.S. data due for Friday include real earnings, manufacturing and trade inventories, and the IBD/TIPP economic optimism index.
World stock markets were mostly higher overnight. News that the German lawmakers have formed a coalition government worked to lift the Euro currency to a four-year high against the U.S. dollar, and also boosted the European stock markets. U.S. stock indexes are pointed toward firmer openings and new record highs when the New York day session begins.
The key outside markets on Friday morning see the U.S. dollar index solidly lower and at a 3.5-month low. The greenback bears have the solid overall near-term technical advantage, to suggest more pressure in the near term.
Meantime, Nymex crude oil prices are weaker on some profit taking after hitting a three-year high of $64.77 a barrel on Thursday. The U.S. government is expected to rule on Friday whether it extends or waives economic sanctions against Iran. The recent rally in oil prices has been a positive development for the raw commodity sector.
In overnight news, China reported a record trade surplus with the U.S. in 2017, at $276 billion. China’s total December imports were up 4.5%, year-on-year, while its exports were up 10.9% in the same period.
Technically, February gold futures bulls have the firm overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bulls’ next upside technical objective is pushing and closing prices above chart resistance at $1,350.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,300.00. First support is seen at the overnight low of $1,320.80 and then at $1,316.10. First resistance is seen at the overnight high of $1,333.80 and then at $1,340.00. Wyckoff’s Market Rating: 6.5
March silver bulls have the overall near-term technical advantage. Prices are still in a four-week-old uptrend on the daily bar chart, but just barely. The next upside price breakout objective is closing futures prices above solid technical resistance at the October high of $17.59 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the October low of $16.435. First resistance is seen at the overnight high of $17.195 and then at last week’s high of $17.32. Next support is seen at this week’s low of $16.93 and then at $16.75. Wyckoff's Market Rating: 6.0.