Corrective price pullbacks in gold, silver amid as-expected U.S. CPI

Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - Gold and silver prices are are lower in early U.S. trading Tuesday, on routine downside price corrections following strong gains posted Monday. The general marketplace has breathed a slight sigh of relief following a U.S. inflation report that did not come in hotter than expected amid the current financial turmoil. April gold was last down $3.60 at $1,913.00 and May silver was down $0.198 at $21.71.

The just-released U.S. consumer price index report for February showed a rise of 6.0%, year-on-year (up 0.4% from January), which is right in line with market expectations and compares to a rise of 6.4% in the January CPI report. The core CPI number was up 5.5%, also in line with market expectations. Gold and silver prices regained some overnight losses on the inflation data, which traders and investors were worried would come in hotter than expected.

Global stock markets were mostly lower overnight, while U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor anxiety is still elevated Tuesday, following late last week’s collapse of Silicon Valley Bank (SVB), the sixteenth largest bank in the U.S. The reverberations of the bank failure are still present in the marketplace and will likely continue to be for at least the next few days.

Goldman Sachs and many other analysts are forecasting the Federal Reserve now will not raise U.S. interest rates at its FOMC meeting next week. The fear in the marketplace is a contagion effect and crisis of confidence among the public. So far today, there does not appear to be extreme anxiety or panic in the marketplace, following the U.S. government’s pledge to cover the funds for all of SVB’s depositors—but not its investors in its stock.

The U.S. Treasury market has stabilized. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.605%. Another surge in U.S. T-Bond and T-Note prices (falling yields) would suggest a surge in marketplace worry and anxiety. The U.S. 2-year Treasury note on Monday surged to the largest daily price gain (yield decline) since the stock market meltdown in 1987.

The key outside markets today see the U.S. dollar index firmer after a steep two-session downdraft. Nymex crude oil futures prices are solidly lower and trading around $73.00 a barrel. Crude has been hit this week by worries about declining global demand amid the financial turmoil and its lingering implications.

Other U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail sales indexes and the NFIB small business index.

Technically, the gold futures bulls have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,810.80. First resistance is seen at this week’s high of $1,919.50 and then at $1,932.40. First support is seen at $1,900.00 and then at $1,885.00. Wyckoff's Market Rating: 7.0

The silver bulls and bears are back on a level overall near-term technical playing field. A six-week-old downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at the March low of $19.945. First resistance is seen at this week’s high of $22.045 and then at $22.25. Next support is seen at $21.395 and then at $21.00. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoff

jwyckoff@kitco.com

www.kitco.com