(Kitco News) - Gold and silver prices are solidly lower but up from daily lows in early U.S. trading Thursday, following another tame U.S. inflation report. August gold was last down $21.00 at $2,333.40. July silver hit a five-week low overnight and was last down $0.827 at $29.45.
(Just a note to remind that Comex gold and silver futures markets’ official closes and daily settlements occur just after midday. Thus, on busy afternoons in the markets, such as Wednesday, the following day’s differences in daily price changes between futures and spot can be large, due to gold and silver futures prices settling at midday—before important news developments such as Wednesday’s FOMC meeting conclusion.)
Today’s U.S. producer price index report for May came in at down 0.2%, month-on-month, versus market expectations for up 0.1% and compares to the April report’s rise of 0.5%. The core PPI in May (minus food and energy) came in at unchanged versus up 0.3% expected, month-on-month, and compares to a rise of 0.5% in the April report.
Traders and investors today are still digesting a busy and important trading day Wednesday that saw a tame U.S. consumer price index report but more-hawkish-than-expected Federal Reserve FOMC meeting results. The precious metals, stock and U.S. Treasury markets bulls were humming along quite well in the aftermath of the cooler CPI print Wednesday morning. And then the Fed delivered a surprisingly hawkish outlook early Wednesday afternoon. The FOMC members revised U.S. rate-cut expectations to one cut from three cuts that were expected in March. Updated Fed projections also included upward revisions to U.S. inflation in 2024 and 2025 to 2.6% (2.4% in March) and 2.3% (2.2% in March), respectively. The Fed did hold its monetary policy steady at this week’s meeting. Fed Chairman Jerome Powell at his press conference said the latest inflation numbers lower than expected but may not have been fully reflecting the latest quarterly Fed projections. The precious metals, the U.S. stock index and U.S. Treasury markets all lost some steam after the Fed statement and Powell presser.
Still, a Barron’s headline today reads: “Markets remain confident of cuts despite Fed.” The story said “traders seem to think they know more than the Federal Reserve about where interest rates are going.” Indeed, that’s a fair criticism as the past couple years have seen the Fed behind the curve on actual U.S. economic developments, and the U.S. central bank could now be behind the curve on problematic inflation actually being tamped down. Today’s cooler PPI report falls in line with that notion.
Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins.
The key outside markets today see the U.S. dollar index firmer following Wednesday’s sell off. Nymex crude oil prices are a bit lower and trading around $78.15 a barrel. The benchmark 10-year U.S. Treasury note yield is presently around 4.25%.
Other U.S. economic data released Thursday saw a bigger-than-expected rise in weekly jobless claims.
Technically, August gold bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at last week’s high of $2,406.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $2,304.20. First resistance is seen at $2,350.00 and then at $2,375.00. First support is seen at the overnight low of $2,319.20 and then at $2,304.20. Wyckoff's Market Rating: 5.5.
July silver futures bulls have the overall near-term technical advantage. However, prices are trending down on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $31.00. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at today’s high of $29.83 and then at $30.00. Next support is seen at the overnight low of $28.905 and then at $28.50. Wyckoff's Market Rating: 6.0.
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