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Gold sees modest price gains as U.S. inflation running hot

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(Kitco News) - Gold prices are modestly higher and erased slight overnight losses in early U.S. trading Friday. The yellow metal rallied a bit following a U.S. inflation report that came in slightly hotter than expected. A higher U.S. dollar index and rising U.S. Treasury bond yields are limiting the upside for the metals today. February gold was last up $4.30 at $1,781.40 and March Comex silver was last up $0.047 at $22.07 an ounce.

The just-released U.S. data point of the week, the November consumer price index report, came in at up 0.8% and up 6.8%, year-on-year. The CPI report was expected to come in up 0.7% from November and up 6.7%, year-on-year. Today's numbers are at a nearly 40-year high for U.S. inflation. Federal Reserve officials will be scrutinizing the CPI report very closely, ahead of their FOMC monetary-policy-setting meeting next week. The Fed has recently done an "about-face" on inflation prospects—going from saying it's only transitory to new believing it's not just temporary and may even become problematic.

Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite has grown markedly this week, but after strong gains in the U.S. stock indexes earlier this week, the markets are seeing some normal pausing action late this week. It appears the Omicron variant has left center stage of the marketplace. However, as the holidays approach, the Delta strain of the coronavirus is surging in parts of the U.S.

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The key "outside markets" today see Nymex crude oil prices higher and trading around $71.65 a barrel. Crude oil bulls have also had a very good week. The U.S. dollar index is higher early today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.515%.

Other U.S. economic data due for release Friday includes real earnings, the monthly Treasury budget statement and the University of Michigan consumer sentiment survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, February gold futures bulls have the slight overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,761.00. First resistance is seen at this week's high of $1,794.30 and then at $1,800.00. First support is seen at the overnight low of $1,770.40 and then at last week's low of $1,762.20. Wyckoff's Market Rating: 5.5

Live 24 hours silver chart [ Kitco Inc. ]

The March silver bears have the firm overall near-term technical advantage. Prices hit a nine-week low overnight. Prices have been trending down for three weeks. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.46. First resistance is seen at Thursday's high of $22.475 and then at this week's high of $22.635. Next support is seen at the overnight low of $21.815 and then at $21.46. Wyckoff's Market Rating: 2.0.

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.