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Gold price rallies sharply after slightly tamer U.S. CPI

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(Kitco News) - Gold and silver prices are sharply higher in early U.S. trading Tuesday, following a slightly tamer-than-expected U.S. inflation report. Gold surged to a four-month high and silver to a seven-month high right after the report’s release. February gold was last up $29.50 at $1,821.30 and March silver was up $0.627 at $24.03.

The just-released U.S. consumer price index report for November showed a rise of 0.1% from October and was up 7.1%, year-on-year. CPI was expected to come in up 0.3% from October and up 7.3%, year-on-year. The slightly cooler-than-expected inflation data was enough to rally the stock and financial markets, and the metals, while tanking the U.S. dollar index. The CPI report lands in the camp of the U.S. monetary policy doves, who want to see the Federal Reserve back off the accelerator on its aggressive monetary policy tightening path.

Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. U.S. stock indexes surged following the CPI report.

Also featured this week are major central bank meetings. The Federal Reserve’s Open Market Committee (FOMC) meeting begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Powell. The FOMC is mostly likely to raise U.S. interest rates by 0.5%. The European Central Bank and the Bank of England meet on Thursday and are likely to follow the U.S. Federal Reserve with half-point rate hikes.

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The key outside markets today see the U.S. dollar index sharply down and hitting a 5.5-month low. Nymex crude oil prices are modestly higher and trading around $74.00 a barrel. A major oil pipeline in the U.S. has been shut due to a leak, and that’s supporting Nymex crude oil prices this week. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.476%, and down after the cooler CPI report.

Other U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, the NFIB small business index, real earnings and the IBD/TIPP economic optimism index.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls have the overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the August high of $1,836.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at today’s high of $1,831.60 and then at $1,836.70. First support is seen at $1,800.00 and then at this week’s low of $1,789.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the firm overall near-term technical advantage. A choppy, three-month-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.25 and then at $24.50. Next support is seen at the overnight low of $23.49 and then at this week’s low of $23.32. Wyckoff's Market Rating: 7.0.

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.