(Kitco News) - Gold and silver prices are down on follow-through selling pressure after solid losses posted Tuesday, in the wake of a warmer U.S. inflation report that prompted ideas no interest rate cuts are coming from the Federal Reserve this spring. April gold was last down $4.80 at $2,002.40. March silver was last down $0.089 at $22.065.
The marketplace has mostly digested Tuesday’s U.S. consumer price index report for January that came in at up 3.1%, year-on-year, compared to forecasts for up 2.9% and compares to a rise of 3.4% in the December report. The “core” CPI (excluding food and energy) for January came in at up 3.9%, year-on-year. The U.S. stock indexes sold off sharply, the U.S. dollar index surged, U.S. Treasury yields rose significantly and gold prices posted solid losses. The CPI report all but dashed hopes the Federal Reserve would start to lower interest rates early this spring. The warmer-but-still-not-hot CPI print Tuesday was not that far out of line from market expectations, yet the aforementioned markets showed serious reactions. It’s my bias the CPI report that was a bit warmer than expected was just an excuse for the U.S. stock market to experience a downside correction that was needed anyway, after the major U.S. indexes hit record highs earlier this week. And the U.S. dollar index was already trending up before the CPI news. Bond yields were already creeping up, too. Don’t be surprised to see stock market bulls look at Tuesday’s big pullback as a buying opportunity in existing solid price uptrends for the major indexes.
The next U.S. inflation report comes with Friday’s producer price index report for January, seen coming in at up 0.1% from December, compared to a 0.1% month-on-month decline in the December PPI report.
Asian and European stock markets were mixed in overnight trading. China is celebrating its Lunar New Year holiday this week and many China markets are still closed. U.S. stock index futures are set to open higher when the New York day session begins.
The key outside markets today see the U.S. dollar index a bit weaker after hitting a three-month high Tuesday. Nymex crude oil prices are slightly higher and trading around $78.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching 4.291%.
U.S. data out today includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
Technically, the gold futures bears have the slight overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $2,083.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,950.00. First resistance is seen at $2,010.30 and then at $2,023.30. First support is seen at $1,985.00 and then at the November low of $1,975.10. Wyckoff's Market Rating: 4.5.
The silver bears have the firm overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $23.445. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at $22.50 and then at $23.00. Next support is seen at $21.75 and then at $21.50. Wyckoff's Market Rating: 3.0.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Email me at jim@jimwyckoff.com and I’ll add your email address to my Front Burner list.)
