Gold price still sliding after hot U.S. inflation report
(Kitco News) - Gold prices are lower and hit a four-month low in early U.S. trading Tuesday. Bulls got no help from another hot U.S. inflation report that was just released. A U.S. dollar index that this week hit a 20-yeare high and U.S. Treasury yields that this week hit multi-year highs are significantly bearish elements for the precious metals markets. August gold futures were last down $9.00 at $1,822.80.July Comex silver futures were last down $0.005 at $21.245 an ounce.
Today’s U.S. producer price index report for May came in a up 10.8%, year-on-year and up 0.5% from April. Those numbers were close to market expectations and the markets showed no major reaction. But make no mistake: inflation in the U.S. and around the globe is running hot and is problematic. History shows problematic price inflation is longer-term bullish for hard assets, including the metals markets.
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. stock indexes are in bear market territory, meaning they are down 20% or more from their highs. Despite today’s rebound in the U.S. indexes, traders and investors see their risk appetites as far from robust.
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The data point of the week is the Federal Reserve’s FOMC meeting that begins on Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to raise U.S. interest rates by at least 0.5%. Some reckon the Fed may raise the key Fed funds rate by 0.75%. Fed Chairman Jerome Powell will hold a press conference after the FOMC meeting concludes Wednesday afternoon.
The key outside markets today see Nymex crude oil prices higher and trading around $121.75 a barrel. The U.S. dollar index is slightly lower in early trading and not far below a 20-year high. The yield on the 10-year U.S. Treasury note is fetching 3.288%. Monday the 10-year note hit the highest level in 14 years, at 3.371%.
Crypto currencies remain under strong selling pressure again, with Bitcoin at a 1.5-year low.
Other U.S. economic data due for release Tuesday includes the NFIB small business index, the Johnson Redbook and chain store sales indexes, and the IDB/TIPP economic optimism index.
Technically, the August gold futures bears have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at this week’s high of $1,882.50. 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 $1,833.30 and then at $1,850.00. First support is seen at the overnight low of $1,809.20 and then at $1,800.00. Wyckoff's Market Rating: 2.5
July silver futures bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $22.565 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 $21.50 and then at $22.00. Next support is seen at this week’s low of $20.91 and then at $20.42. Wyckoff's Market Rating: 2.0.