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Traders finally seeking gold, silver as inflation hedge amid hot price data

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(Kitco News) - For many gold and silver market bulls, it took a while for their markets to catch fire due to rising and even problematic inflation around the globe. However, at mid-week it appears traders are now seeking out hard assets in the form of precious metals, as an inflation hedge.

Wednesday’s U.S. consumer price index for October came in hot, 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, 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.

Just recently, several Federal Reserve officials seemingly grudgingly are coming around to the notion that rising inflationary pressures are something more than just “transitory.”

Gold prices hit a five-month high Wednesday and silver notched a three-month high. Both metals have seen their near-term technical postures improve markedly, suggesting there is more room on the upside for prices.

Live 24 hours gold chart [Kitco Inc.]

Technically, December gold futures bulls now 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 today’s high of $1,870.60 and then at $1,880.00. First support is seen at $1,839.00 and then at today’s low of $1.823.00.

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls also have the overall near-term technical advantage. Bulls have restarted a six-week-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $26.13 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.50 and then at $25.75. Next support is seen at $24.50 and then at today’s low of $24.04.

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.