(Kitco News) - Gold and silver prices are weaker in early U.S. trading Thursday, in the aftermath of a U.S. inflation report that came in hotter than expected. However, both metals were already under selling pressure overnight, and only slightly extended losses after the report. Profit-taking from the shorter-term futures traders is featured in both metals today. February gold was last down $21.80 at $2,734.90 and March silver was down $0.287 at $32.68.
The U.S. data point of the day saw the producer price index report for November come in hot at up 0.4%, month-on-month, double the 0.2% rise expected. This follows a 0.2% rise in the October report. However, the core rate (minus food and energy) came in as expected at up 0.2 percent. The annual headline PPI reading is up 3.0%. Somewhat surprisingly, the marketplace is not reacting much to the hot headline PPP number. The PPI data follows the U.S. consumer price index report on Wednesday that came in as expected. Bloomberg reported today that the CPI report “is seen as a green light for the Fed to cut rates by a quarter point next week. Inflation is still higher than policy makers would like so the pace of cuts next year is less certain.” Reads a headline just out from Barrons: “Producer inflation comes in hot. The Fed will still cut.”
Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Chinese stock indexes ended higher Thursday as traders continued to react to the promise of further government stimulus and on reports monetary authorities will move to weaken the Chinese yuan. The Chinese currency has already lost around 5% against the U.S. dollar since September.
The Swiss National Bank lowered interest its main rate by a half point, more than expected and getting closer to zero. The European Central Bank has just announced a 25 basis-point rate cut, which was fully expected.
Meantime, France’s economic outlook is deteriorating as the government’s collapse and the scrapping of its 2025 budget have added to months of political upheaval.
The key outside markets today see the U.S. dollar index slightly down. Nymex crude oil futures prices are near steady and trading around $70.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.298%.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report.
Technically, February gold bulls have the solid overall near-term technical advantage. Prices are in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,826.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,650.00. First resistance is seen at $2,750.00 and then at the overnight high of $2,761.30. First support is seen at Wednesday’s low of $2,719.10 and then at $2,700.00. Wyckoff's Market Rating: 7.5.
March silver futures bulls have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $34.00. The next downside price objective for the bears is closing prices below solid support at $31.00. First resistance is seen at $33.00 and then at the overnight high of $33.33. Next support is seen at Tuesday’s low of $32.305 and then at $32.00. Wyckoff's Market Rating: 7.0.
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