(Kitco News) - Gold prices are posting strong gains and silver is moderately up in early U.S. trading Thursday. More safe-haven demand amid worries about a U.S.-China trade war and a cooler U.S. inflation report are giving the precious metals traders bullish fodder late this week. Also, there are still some lingering worries about the stability of the U.S. Treasury market, albeit less than seen 24 hours ago. June gold was last up $69.30 at $3,146.40. May silver prices were last up $0.54 at $30.95.
Mostly overshadowed by the tariff news Wednesday, today’s key U.S. consumer price index report for March came in at up 2.4%, year-on-year, and was expected to come in up 2.6% and compares to up 2.8% in the February report. The “core” CPI, which excludes food and energy, came in at up 2.8% and was seen coming in at up 3.0% in March, versus up 3.1% in the February report. This data falls squarely into the camp of the U.S. monetary policy doves, who want lower interest rates sooner.
Asian and European stock markets were sharply up in overnight trading. U.S. stock indexes are pointed to solidly lower openings today in New York, following strong gains Wednesday. The S&P 500 closed up 9.5% Wednesday, posting its biggest one-day jump since October of 2008. The midday news that the Trump administration eased up on most of tariffs, but raised them for China, boosted the U.S. stock market. Still, China is the world’s second-largest economy and the U.S.-China trade war still has potentially dire consequences for the global economy in the coming months. Said David Morrison of Trade Nation today: “If there had been any doubt previously, the real target of President Trump’s tariffs is now apparent. The Trump administration does not view China as a friendly trading partner, but a full-on enemy.”
Insiders are saying President Trump blinked in the global trade war stare down because the U.S. Treasury market had become unstable. A Barron’s headline today reads: “Trump can’t beat the bond market.” The U.S. Treasury market has stabilized somewhat but it does not appear to be quite out of the woods yet, given the only tepid rebound in prices (dip in yields) after the Trump trade tariff announcement at midday Wednesday. Barron’s said Treasury risks are “still lurking.”
The key outside markets today see the U.S. dollar index sharply down. Nymex crude oil futures prices are solidly lower and trading around $60.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note presently at 4.308%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the consumer price index, real earnings and the monthly retail sales chain store index.
Technically, June gold futures bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $3,201.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,000.00. First resistance is seen at $3,150.00 and then at $3,175.00. First support is seen at $3,125.00 and then at $3,1000.00. Wyckoff's Market Rating: 8.5.
May silver futures bulls and bears are on a level overall near-term technical playing field. This week’s price action suggests the bears became exhausted and that a near-term price bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $32.00. The next downside price objective for the bears is closing prices below solid support at this week’s low of $27.545. First resistance is seen at the overnight high of $31.245 and then at $31.50. Next support is seen at $30.50 and then at $30.00. Wyckoff's Market Rating: 5.0.
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