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Gold, silver prices see bullish follow-through price action

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(Kitco News) - Gold and silver prices are higher in early U.S. trading Wednesday, on follow-through strength after posting good gains Tuesday after a tamer U.S. inflation report that may have changed the trajectory of Federal Reserve monetary policy. December gold was last up $8.10 at $1,974.60. December silver was last up $0.313 at $23.445.

Trader and investor attitudes are more upbeat at mid-week following Tuesday morning’s U.S. consumer price index report for October came in at up 3.2%, year-on-year. CPI was forecast at up 3.3%, year-on-year, versus a gain of 3.7% in the September report. The core CPI rate was up 4.0% in October, compared to the consensus forecast of up 4.1% and up 4.1% in the September CPI report. This data fell into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve halt its interest-rate-tightening cycle. U.S. Treasury yields dropped on the CPI data and the U.S. dollar index sold off sharply. The U.S. stock indexes rallied strongly on the CPI news.

The U.K. also got some better inflation news at mid-week. Consumer prices were 4.6% higher in October, year-on-year, following a rise of 6.7% in September. The October rise in CPI was the slowest in the U.K. in two years. Some analysts are now saying the better U.K. inflation data will end the Bank of England’s interest-rate-increase cycle.

Asian and European markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed to firmer openings when the New York day session begins, following strong gains posted Tuesday that pushed the indexes to multi-week highs.

In other overnight news, China got some slightly better-than-expected economic data when its industrial output for October was reported up 4.6%, year-on-year, versus expectations for a rise of 4.3%.

On tap today, U.S. President Joe Biden and Chinese leader Xi Jinping are set to meet during the Asia-Pacific Economic Cooperation summit in San Francisco. The White House wants a resumption of U.S./China military communications. Iran is also on the agenda, including the question of Iran’s nuclear program. A potential thawing of heretofore icy U.S.-China relations also has traders and investors with more upbeat attitudes this week.

U.S. lawmakers are once again scrambling to pass a measure to fund the federal government. This time the deadline is midnight Friday. This is “old hat” for the marketplace and markets are so far not reacting much to a potential U.S. government shutdown. U.S. congressional leaders are presently working on a plan to avert the shutdown.

Nymex crude oil prices are weaker and trading around $77.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.469%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index report, the weekly DOE liquid energy stocks report, the Empire State manufacturing survey, retail sales, and manufacturing and trade inventories.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,985.00 and then at $2,000.00. First support is seen at the overnight low of $1,965.00 and then at $1,950.00. Wyckoff's Market Rating: 5.0.

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the slight overall near-term technical advantage but the bulls have gained momentum this week. A price downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $24.05. The next downside price objective for the bears is closing prices below solid support at this week’s low of $21.925. First resistance is seen at the overnight high of $23.525 and then at the October high of $23.88. Next support is seen at the overnight low of $23.095 and then at $23.00. Wyckoff's Market Rating: 4.5.

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