Gold price rallies on slightly cooler U.S. CPI print
(Kitco News) - Gold and silver prices are solidly higher in early U.S. trading Thursday, with gold scoring a seven-week high and silver a 4.5-month high, following a U.S. inflation report that came in just a bit cooler than market expectations. December gold was last up $24.50 at $1,737.90 and December silver was up $0.513 at $21.84.
The just-released U.S. consumer price index report for October came in up 7.7%, year-on-year, versus expectations for a rise of 7.9%, year-on-year, and compares to the 8.2% rise seen in the September report. This report may be the most important data point of the month. A slightly cooler reading in the CPI print may influence the Federal Reserve"s decision-making process ahead of its December FOMC meeting.
Global stock markets were mostly weaker overnight. U.S. stock indexes are headed for solidly higher openings when the New York day session begins, following the cooler CPI number.
The crypto currency markets remain in turmoil late this week, with fears of a contagion effect and more illiquidity in the cryptos. Broker SP Angel this morning reports in an email dispatch: A proposed takeover of likely insolvent FTX crypto exchange by rival Binance is set to fail, sending Bitcoin down 26% this week and triggering concerns of wider market contagion. FTX exchange, whose founder Sam Bankman-Fried (likened to John Pierpont Morgan during the banking crisis of 1907), is looking for support for a reported $8 billion debt shortfall. The exchange"s insolvency has triggered a further step down in crypto market values, with the total crypto market cap standing at $914 billion, down from over $3 trillion in November 2021. JP Morgan are reporting crypto market participants are facing a "cascade" of margin calls, although it is unclear whether this will feed into wider equity markets.
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The key outside markets today see the U.S. dollar index sharply down after the cooler CPI. Nymex crude oil prices are firmer and trading around $86.75 a barrel. Oil prices have slipped this week on worries of slowing demand from China, due to rising Covid cases there. The 10-year U.S. Treasury note is yielding 3.931% and has fallen significantly in the wake of the cooler CPI report.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.
Technically, the gold futures bears still have the slight overall near-term technical advantage. However, bulls have momentum and the recent choppy and sideways price action suggests a market bottom is in place. This week"s bullish upside breakout from the choppy trading range on the daily bar chart suggests still more upside is likely in the near term. Bulls" next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,618.30. First resistance is seen at $1,750.00 and then at $1,775.00. First support is seen at the overnight low of $1,705.50 and then at $1,700.00. Wyckoff's Market Rating: 4.5
The silver bulls have the firm overall near-term technical advantage. A choppy, nine-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at $22.00 and then at $22.50. Next support is seen at $21.31 and then at $21.00. Wyckoff's Market Rating: 6.5.