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Gold price rallies to 5-mo. high on hot U.S. inflation report

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(Kitco News) - Gold prices are solidly higher and hit a nearly five-month high in early U.S. dealings Wednesday, following a hot U.S. inflation reading. There were also hot inflation numbers coming out of China Wednesday. December gold was last up $16.30 at $1,848.00 and December Comex silver was last up $0.282 at $24.58 an ounce.

The just-released U.S. consumer price index for October came in at up 0.9% and up 6.2%, year-on-year. The CPI was expected to come in at up 0.6% from September and up 5.9%, year-on-year. The October numbers are the highest U.S. CPI readings in over 30 years. Tuesday’s U.S. producer price index showed a rise of 8.6%, year-on-year.

Meantime, weekly U.S. jobless claims fell 4,000, to 267,000 in the latest reporting week. Those numbers were close to trade expectations. The weekly jobless claims report was released a day early due to the U.S. Veterans Day holiday on Thursday.

Global stock markets were mixed in overnight trading. The U.S. stock indexes are pointed to weaker openings when the New York day session begins. Traders and investors are a bit more risk-averse at mid-week--paying more attention to the prospects for rising and even problematic price inflation. China’s producer price index on Wednesday was reported up 13.5% in October, year-on-year, and up from a 10.7% rise in September. That is the fastest factory gate price rise on recent record. Extreme weather and coal shortages are being reflected in China’s rising PPI.

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are weaker and trading around $83.75 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.481%.  

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, monthly wholesale trade, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures bulls have the firm overall near-term technical advantage and have momentum. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,758.50. First resistance is seen at $1,850.00 and then at $1,860.00. First support is seen at $1,839.00 and then at the overnight low of $1.823.00. Wyckoff's Market Rating: 7.0.

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the October high of $24.92 and then at the September high of $24.945. Next support is seen at $24.00 and then at $23.75. Wyckoff's Market Rating: 5.5.

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.