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Gold price rallies after stable U.S. inflation reading

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(Kitco News) - Gold prices erased overnight losses and are moderately up in early U.S. trading Thursday, following a steady U.S. inflation reading just released. Gold hit a six-week low and silver a two-year low in overnight dealings. August gold futures were last up $6.40 at $1,823.90. Gold prices overnight came close to key chart support levels ($1,800.00 and $1,792.00) that if breached would likely set off heavy sell stop orders in the futures market. July Comex silver futures were last down $0.173 at $20.49 an ounce.

The U.S. data point of the day is the personal income and outlays report for May, including the personal consumption expenditures price index component of the report that is said to be the Federal Reserve’s favorite inflation gauge. The May CPE price index came in up 6.3%, year-on-year, with the core rate up 4.7% in the same period. In the April report, the PCE price index was also reported up 6.3%, year-on-year. Metals traders were a bit assuaged by the stable readings in the report, as many reckoned the numbers could have been worse, possibly prompting the Federal Reserve to be even more aggressive in its monetary policy tightening. Raw commodity traders, including metals traders, have taken a tack recently of being more worried about less consumer and commercial demand for commodities amid an economic recession—as opposed to the notions of higher inflation being supportive for raw commodity prices.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins, on this last trading day of the month and of the first half of 2022. Reports said the S&P 500 is set to close out its worst half-year since the 1970s. Trader and investor risk appetite has receded late this week, following downbeat consumer confidence and GDP readings out of the U.S. this week. Fed Chairman Powell and ECB President Lagarde on Wednesday repeated warnings that their central banks will keep raising interest rates even if their economies slowed down. Recently, much of the marketplace has deemed economic recessions potential as superseding inflation worries, when placing their trades.

Gold price jumps as Fed's preferred inflation indicator shows signs of cooling

In overnight news, Sweden’s central bank raised its key interest rate by 0.5%, to 0.75%.

The key outside markets today see Nymex crude oil prices slightly lower and trading around $109.50 a barrel. The U.S. dollar index is firmer in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 3.057%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, personal income and outlays, and the ISM Chicago business survey.

Live 24 hours gold chart [Kitco Inc.]

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 the June high of $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $1,792.00. First resistance is seen at Wednesday’s high of $1,834.90 and then at this week’s high of $1,842.80. First support is seen at $1,815.00 and then at $1,800.00. Wyckoff's Market Rating: 3.0.

Live 24 hours silver chart [ Kitco Inc. ]

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 this week’s high of $21.535 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at the overnight high of $20.705 and then at $21.00. Next support is seen at the overnight low of $20.205 and then at $20.00. Wyckoff's Market Rating: 1.0.

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