Gold Prices Gold Prices Pressured Slightly by US PPI
Editor's Note: The article was updated to reflect a shift in prices following U.S. June PPI data.
(Kitco News) -Gold prices are steady to slightly lower in early U.S. trading Friday. A modest uptick in U.S. producer inflation did put some mild pressure on the gold and silver markets. Still, sellers of the safe-haven metals are timid heading into the weekend. The metals are also still feeling the bullish effects of major central banks this week sounding very dovish on their monetary policies. August gold futures were last down $0.50 an ounce at 1,406.20. September Comex silver prices were last down $0.061 at $15.085 an ounce.
The U.S. economic highlight of the day was the just-released producer price index for June, which came in at up 0.1%, with the core number up 0.3%. The readings were expected to be steady from May on the main PPI and up 0.2% in the “core” index, which excludes food and energy. Still, the PPI numbers are not being read as problematic for inflation. On Thursday a slightly higher than expected reading on the U.S. consumer price index did get the attention of the marketplace.
U.S. stock indexes are firmer and at or near record and contract highs in early U.S. trading. Asian and European stock indexes were also mostly up overnight. Easy monetary policies from the major central banks of the world continue to push world stock markets higher. Gold has been able to hold its own this week despite the rallies in the competing asset class of equities.
In overnight news, China’s exports in June were reported down 1.3%, year-on-year, according to official data Friday. Forecasters expected a 2.0% decline. China’s imports dropped by 7.3% in June, following an 8.5% decline in May. A drop of 3.8% was expected in June. This downbeat data underscores the damage China’s trade war with the U.S. has caused to the world’s second-largest economy.
A Wall Street Journal survey of economists showed those polled see a 30% chance of a U.S. recession within the next year. Sixty-eight percent of the economists see a U.S. interest rate cut at the end of July.
The U.S. economic highlight of the day will be the release of the producer price index for June, which is expected to be steady from May and up 0.2% in the “core” index, which excludes food and energy. On Thursday a slightly higher than expected reading on the U.S. consumer price index did get the attention of the marketplace.
Technically, the gold bulls have the firm overall near-term technical advantage. A six-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the June high of $1,442.90. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at the July low of $1,384.70. First resistance is seen at today’s high of $1,414.20 and then at $1,420.00. First support is seen at today’s low of $1,405.30 and then at $1,400.00. Wyckoff's Market Rating: 7.5.
September silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.625 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.70. First resistance is seen at this week’s high of $15.345 and then at $15.51. Next support is seen at Wednesday’s low of $15.07 and then at $15.00. Wyckoff's Market Rating: 5.5.