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Some price pressure on gold amid hotter U.S. inflation data

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(Kitco News) - Gold prices are lower in early morning U.S. trading Thursday, hitting daily lows following a U.S. inflation report whose numbers were higher than expected, which in turn pushed U.S. Treasury yields up a bit. However, gold and silver prices have since rebounded well up from their daily lows. Some more profit taking from the shorter-term futures traders is featured this morning. August gold futures were last down $6.00 at $1,888.20 and July Comex silver was last up $0.013 at $28.01 an ounce.

The U.S. economic data point of the week saw the consumer price index report for May come in at up 0.6%, which was a big higher than the 0.5% rise expected. Year-on-year the CPI rose to 5.0% in May versus April’s rise of 4.7%. Today’s report falls into the camp of those who think inflation could get too hot in the coming months. On a near-term basis, the gold and silver traders are placing more emphasis on the uptick in bond yields after the CPI report, and less on the bullish implications of rising inflation down the road.

The weekly U.S. jobless claims report showed a drop in claims in the latest period, which was also deemed a bit negative for the safe-haven metals.

Global stock markets were mixed overnight, with European shares mostly flat and Asian shares mostly firmer. U.S. stock indexes are pointed toward mixed to weaker openings when the New York day session begins. The global marketplace remains calm at present, amid no major geopolitical flareups in play and some typical summertime-doldrums trading occurring.

What has possibly flown under the radar screen of many in the marketplace recently is the quiet, steady decline in U.S. Treasury yields, which this week dropped to more-than-three-month lows. The yield on the benchmark 10-year U.S. Treasury note is presently fetching 1.52%. Rising raw commodity prices and some supply shortages, combined with major economies busting out of their pandemic shackles, have raised the specter of rising and possibly problematic price inflation in the coming months. However, the big element that does not jibe with the steepening inflation theory is U.S. government bond yields that remain near historically low levels. The stubbornly low U.S. bond yields support the Federal Reserve’s assertions that the rising trajectory of inflation is only transitory.

The European Central Bank held its regular monetary policy meeting on Thursday. No change in monetary policy was announced and none was expected.

The marketplace will monitor the weekend meeting of the Group of Seven countries. A draft of the meeting communique shows the group will focus on its collective relations with China and Russia.

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are slightly up and trading around $70.00 a barrel after hitting a 2.5-year high of $70.62 on Wednesday.

Other U.S. economic data due for release Wednesday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls have the firm overall near-term technical advantage amid a nine-week-old price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the June high of $1,919.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,900.00 and then at this week’s high of $1,906.90. First support is seen at the overnight low of $1,871.80 and then at $1,866.70. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage but a two-month-old price uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at the May high of $28.90 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at this week’s high of $28.145 and then at $28.37. Next support is seen at today’s low of $27.475 and then at $27.31. Wyckoff's Market Rating: 6.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.