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Gold price weaker in choppy action after slightly tamer U.S. inflation data

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(Kitco News) - Gold prices are modestly down in early U.S. trading Wednesday, following a U.S. inflation report that came in not as hot as the marketplace expected. Gold prices hit a four-week high and silver prices a five-week high early on today. October gold futures were last down $2.60 at $1,798.70. September Comex silver futures were last up $0.038 at $20.52 an ounce.

The U.S. consumer price index report for July came in at unchanged from June and up 8.5%, year-on-year. The report was expected to be up 8.7%, year-on-year, after a rise of 9.1% in the June report. Gold prices initially rallied to a four-week high on the news, as the U.S. dollar index dropped sharply and U.S. Treasury yields declined. However, bond yields then ticked back up. Meantime, the U.S. stock indexes rallied amid “risk-on” trading attitudes that also worked to push the safe-haven metals down from their higher levels. After having a bit of time to think about today’s CPI data, traders and investors reckoned that while the data was a bit tamer, it still suggests problematic price inflation that will probably keep the Federal Reserve on its aggressive path of tightening U.S. monetary policy. Thursday comes the producer price index report for July, seen up 0.2% from June and compares to the June report’s rise of 1.1% from May.

Global stock markets were mostly down overnight. In overnight news, China said it has stopped its military exercise around Taiwan, but now says it’s preparing for war. On the economic front, China said its consumer price inflation in July was up 2.7%, year-on-year, which is the highest rate in two years.

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The key outside markets today see Nymex crude oil prices down a bit and trading around $90.00 a barrel. The U.S. dollar index sharply lower and hit a four-week low in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 2.7%.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, monthly wholesale trade, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the October gold futures bears have the overall near-term technical advantage. However, a fledgling price uptrend is in place on the daily bar chart to suggest a market bottom is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at today’s high of $1,814.40 and then at $1,825.00. First support is seen at Tuesday’s low of $1,788.50 and then at this week’s low of $1,776.20. Wyckoff's Market Rating: 3.5

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures bears have the overall near-term technical advantage. However, bulls have gained some momentum this week to suggest more upside in the near term. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at today’s high of $20.795 and then at $21.00. Next support is seen at $20.25 and then at $20.00. Wyckoff's Market Rating: 3.5.

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.