Gold price rallies following tamer U.S. inflation report

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(Kitco News) - Gold and silver prices are solidly higher, near their daily highs and hit three-week highs in the aftermath of a U.S. inflation report that came in a bit tamer than market expectations. August gold was last up $16.10 at $1,953.00 and September silver was up $0.509 at $23.815.

The U.S. data point of the week saw the consumer price index report for June come in up 3.0%, year-on-year, which is slightly lower than the expected rise of 3.1% and compares to the gain of 4.0% in the May report. The "core" CPI, which excludes food and energy, came in at up 4.8%, year-on-year, compared with expectations of up 5.0%. These numbers fall into the camp of the monetary policy doves, who want to see the Federal Reserve continue to stand pat on interest rate levels.

The U.S. dollar index sold off, stock indexes rallied sharply and U.S. Treasury yields dipped following the upbeat CPI data.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins.

The key outside markets today see the U.S. dollar index solidly lower and near its daily low. Nymex crude oil prices are firmer and trading around $75.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.895%--down from overnight levels.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the Federal Reserve's beige book and the weekly DOE liquid energy stocks report.

Technically, the gold futures bears have the slight overall near-term technical advantage. However, a nine-week-old price downtrend on the daily bar chart has stalled out. Bulls' next upside price objective is to produce a close in August 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 $1,965.00 and then at $1,975.00. First support is seen at the overnight low of $1,937.50 and then at $1,925.00. Wyckoff's Market Rating: 4.5

The silver bulls and bears are on a level overall near-term technical playing field. A nine-week-old downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at the June high of $24.835. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at $24.00 and then at $24.50. Next support is seen at the overnight low of $23.31 and then at $23.00. Wyckoff's Market Rating: 5.0.