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Gold firmer, sees little price reaction to hot U.S. inflation data

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Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) - Gold and silver futures prices are up a bit in early U.S. trading Wednesday and showed little reaction to a hot U.S. inflation report. The precious metals are supported at mid-week by friendly daily outside markets that include higher crude oil prices, a weaker U.S. dollar index and a slight drop in U.S. Treasury yields. February gold futures were last up $1.30 at $1,819.80 and March Comex silver was last up $0.158 at $22.97 an ounce.

The U.S. data point of the week is Wednesday morning's consumer price index report for December, which came in at up 7.0%, year-on-year. The number was expected to come in at up 7.1%. Today's CPI number is the highest year-on-year consumer inflation in 40 years. Traders will be closely watching how U.S. Treasuries react to the CPI data today. There was little initial reaction to the CPI data. If yields do rise significantly, that could spook the general marketplace. The yield on the U.S. 10-year Treasury note is presently fetching 1.741%.

Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

Federal Reserve Chair Jerome Powell on Tuesday reassured the marketplace that the Fed can reduce the pace of price increases without damaging the economy. He also said the U.S. economy is growing at a solid pace. His comments appeared to assuage, at least for the moment, traders and investors who had been a bit nervous about the Fed tightening U.S. monetary policy.

In overnight news, China's consumer price index for December was reported up 1.5% year-on-year, which was just below the 1.6% rise expected.

This is 'the most undervalued metal on the planet' - David Morgan's 2022 outlook

The key "outside markets" today see Nymex crude oil futures prices higher and trading around $81.75 a barrel. The U.S. dollar index is near steady early today.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the Federal Reserve's beige book, the monthly Treasury budget statement, and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the February gold futures bulls have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close in February futures above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,781.30. First resistance is seen at this week's high of $1,823.10 and then at the January high of $1,833.00. First support is seen at $1,810.00 and then at $1,800.00. Wyckoff's Market Rating: 6.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the December high of $23.48 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at $23.00 and then at the December high of $23.48. Next support is seen at this week's low of $22.205 and then at $22.00. Wyckoff's Market Rating: 2.5.

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.