(Kitco News) - Gold prices are modestly down and silver prices modestly up in early U.S. trading Tuesday, just ahead of a key U.S. inflation report. Risk aversion remains elevated in the marketplace amid an active geopolitical environment. February gold was last down $25.80 at $4,589.10. March silver prices were up $0.474 at $85.58.
U.S. consumer price index on deck. The annual inflation rate in the U.S. likely remained at 2.7% in December, while the core rate probably edged up to 2.7% from 2.6% in November, which was the lowest level since early 2021. On a month-over-month basis, today’s headline CPI is expected to have increased by 0.3%, with core CPI (minus food and energy) also seen rising by 0.3%, driven mainly by higher goods prices. Month-over-month figures for November were not published by the Bureau of Labor Statistics, as the agency was unable to collect data during the government shutdown. The December report may point to a reversal of the downward inflationary pressures observed in November. However, concerns over data quality remain as distortions linked to the shutdown may still be affecting the figures.
CME Group will change the way it sets margins for gold, silver, platinum and palladium futures after a surge in prices and volatile trading. The new approach will set margins based on a percentage of so-called notional, the CME said in a notice. Previously, they were based on a dollar amount. The shift takes effect from Tuesday’s close and follows a “normal review of market volatility to ensure adequate collateral coverage,” the CME said. “The percentage-based method intuitively would be able to capture the margin required, which means no need for frequent adjustment,” said an analyst to Bloomberg. However, if volatility went beyond historical levels, or there are unforeseen circumstances, “they may still increase the percentage,” he said.
Trump’s latest tariff threat may undermine U.S.-China trade truce. President Trump’s announcement on Monday of new tariffs on goods from countries trading with Iran risks derailing his one-year trade truce with China, the world’s top buyer of Iranian oil. “Any Country doing business with the Islamic Republic of Iran will pay a tariff of 25% on any and all business being done with the United States of America,” Trump posted on social media Monday and as reported by Bloomberg. The levy is “effective immediately,” he added, without elaborating on the scope or implementation of the charges. It’s unclear if Trump will stack the latest tariffs on top of existing rates or announce carve-outs for China, after his administration previously signaled higher fees could inflict domestic pain. If the U.S. doesn’t respect its deal with China, Beijing has the right to take “appropriate action,” said Zhou Mi, a senior researcher at a think tank affiliated with the Ministry of Commerce. Trump has said he was mulling potential options in response to reports of deadly crackdowns on Iranian demonstrators. China will protect its rights and interests, Foreign Ministry spokeswoman Mao Ning said Tuesday at a regular press briefing in Beijing, when asked about Trump’s tariff remarks. Earlier, China’s embassy in Washington slammed Trump’s threats as “coercion” in a statement to the South China Morning Post, vowing that Beijing would “take all necessary measures to safeguard its legitimate rights,” Bloomberg reported.
Growing civil unrest in Iran; at least 648 killed. Iranian protests appeared to persist in localized pockets overnight as an activist group warned of imminent executions by the state and said the civilian death toll from the unrest could be in the thousands, Bloomberg reports. The Oslo-based Iran Human Rights group said at least 648 people had died in the protests, while estimating the toll could be as high as 6,000. The group warned the “risk of mass and extrajudicial executions of protesters is extremely serious.” In one video that’s been verified by the BBC as coming from a mortuary on the outskirts of Tehran, at least 180 bodies can be seen. The US-based Human Rights Activists News Agency reported that more than 10,700 people had been detained in connection with protests by Monday, and put the death toll at 646. German Chancellor Friedrich Merz said Iran's regime is in its "final days" due to mass protests. Merz's comments came as politicians and investors weigh the possibility of the Islamic Republic's collapse and its consequences on geopolitics and energy markets.
World’s central bankers back Fed’s Powell. Global central bankers threw their support behind Federal Reserve Chairman Jerome Powell after the Trump administration ratcheted up its already unprecedented pressure campaign against the Fed. Reacting to the threat of criminal charges being leveled at Powell and the Fed, central banks, including the European Central Bank and the Bank of England, said in a statement they “stand in full solidarity” with the Fed and Powell. Powell, himself, has also adopted a combative tone in recent days, accusing President Trump of seeking to wrest control over U.S. monetary policy after complaining for months that interest rates are too high.
The key outside markets today see the U.S. dollar index slightly up. Crude oil prices are higher and trading around $60.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.19%.
Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.
Technically, February gold bulls’ next upside price objective is to produce a close above solid resistance at $4,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $4,400.00. First resistance is seen at overnight high of $4,616.90 and then at Monday’s record high of $4,640.50. First support is seen at today’s low of $4,582.80 and then at $4,550.00. Wyckoff's Market Rating: 8.5.
March silver futures bulls have regained power and their next upside price objective is closing prices above solid technical resistance at $87.50. The next downside price objective for the bears is closing prices below solid support at $75.00. First resistance is seen at Monday’s record high of $86.34 and then at $87.00. Next support is seen at the overnight low of $83.355 and then at $82.00. Wyckoff's Market Rating: 9.0
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