(Kitco News) - Gold prices are solidly higher and back above $1,200.00 in early U.S. trading Thursday, on safe-haven demand amid steep sell-offs in world stock markets that have spooked traders and investors around the globe. A very tame U.S. inflation report is also boosting the metals markets. And a lower U.S. dollar index today is also working in favor of the precious metals bulls. December gold futures were last up $17.50 an ounce at $1,210.70. December Comex silver was last up $0.184 at $14.515 an ounce.

The just-released U.S. consumer price index report for September came in at up a scant 0.1% from August, while expectations were for a 0.2% rise. Gold prices pushed to their daily highs on the data, which suggests U.S. inflation is not at all problematic and also hints the Federal Reserve could back off the accelerator on raising U.S. interest rates.

Global stock markets were hammered lower overnight, following the U.S. stock-market pounding that took place Wednesday. China’s stock market dropped over 5% and hit a four-year low overnight. U.S. stock indexes are poised for sharply lower openings and will be at three-month lows when the New York day session begins. You were warned in this report on Monday that the U.S. stock indexes were showing early clues of topping out. Price action Wednesday and today now more strongly suggest the U.S. stock indexes have put in near-term tops, if not major tops. Such is a bullish development for the competing hard assets like the metals.

The sharp decline in the Chinese yuan against the U.S. dollar is in focus again late this week. The depreciating yuan makes China’s exports cheaper on the world market, but it also invites capital outflows from China. The U.S. has warned China about using its currency to gain world trade advantages.

The keen risk aversion now in the marketplace is also due in part to rising world government bond yields, with the implications being rising inflation along with the negative impact on global stock markets. U.S. Treasury prices are actually higher today, on safe-haven demand.

Discussion among traders and investors now is whether the Fed will take its foot off the gas on raising U.S. interest rates. President Trump on Wednesday, following the U.S. stock market sell-off, said “the Fed is making a mistake” and “I think the Fed has gone crazy.” Such rhetoric from the U.S. president will surely garner the attention of the Fed’s FOMC members who set interest rate policy.

The other key outside market today finds November Nymex crude oil prices lower and trading below $72.00 a barrel on concerns about slowing world economic growth that would mean less demand for oil.

Other U.S. economic data due for release Thursday includes the weekly jobless claims report, real earnings, monthly retail chain store sales, and the weekly DOE liquid energy stocks report.

Technically, gold bears still have the firm overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,220.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the August low of $1,167.10. First resistance is seen at the October high of $1,212.30 and then at the September high of $1,218.00. First support is seen at $1,200.00 and then at the overnight low of $1,194.70. Wyckoff's Market Rating: 3.0

December silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the September low of $13.965. First resistance is seen at $14.50 and then at Monday’s high of $14.70. Next support is seen at this week’s low of $14.255 and then at $14.195. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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