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Gold, silver see solid price losses as U.S. CPI runs even hotter

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(Kitco News) - Gold and silver prices are solidly lower and hit three-week lows in early U.S. trading Friday, in the wake of a U.S. inflation report that is problematically high, suggesting bond yields and the U.S. dollar index will continue to rise. August gold futures were last down $21.60 at $1,831.80. July Comex silver futures were last down $0.457 at $21.385 an ounce.

A major data point of the week, if not the month, is the just-released U.S. consumer price index report for May, which came in hot at up 8.6, year-on-year. The CPI was expected to be up 8.2%, year-on-year, after a rise of 8.3% in April. This latest CPI number is the highest of the young inflation cycle. The CPI data comes just ahead of the Federal Reserve’s FOMC monetary policy meeting next week. The hot CPI hints the Fed will continue on its aggressive pace of tightening U.S. monetary policy. U.S. Treasury Secretary Janet Yellen told Congress this week that Americans should expect a prolonged period of high inflation. Many market watchers fear the U.S. economy could slip into recession, or have a bout of dreaded “stagflation”—meaning stalled economic growth with high inflation.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite is dented on this last trading day of the week, as it appears China just can’t get past Covid 19. Reports said the major Chinese city of Shanghai has again imposed new Covid restrictions, after lifting some recently.

Gold market is waiting for next week's Fed meeting - StoneX's O'Connell

China reported its consumer inflation in May at up just 2.1%, year-on-year. China’s producer price index was up 6.4% in May. Meantime, China’s exports were up 16.9% in May, year-on-year, which is double market expectations. Imports were up 4.1% in May.

The key outside markets today see Nymex crude oil prices higher and trading around $122.50 a barrel. The U.S. dollar index is higher in early trading. The yield on the 10-year U.S. Treasury note is fetching 3.06%.  

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

Live 24 hours gold chart [Kitco Inc.]

Technically, the August gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the June high of $1,878.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at the overnight high of $1,851.00 and then at this week’s high of $1,862.40. First support is seen at the June low of $1,830.20 and then at $1,815.00. Wyckoff's Market Rating: 3.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bears have the firm overall near-term technical advantage. A a price uptrend on the daily chart has been negated. Silver bulls' next upside price objective is closing 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 May low of $20.42. First resistance is seen at the overnight high of $21.76 and then at $22.00. Next support is seen at $21.00 and then at $20.75. Wyckoff's Market Rating: 2.5.

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