Gold price weaker after U.S. CPI close to expectations


(Kitco News) – Gold and silver prices are modestly down in early U.S. trading Wednesday. Prices showed little reaction to a major U.S. inflation report that contained no big surprises. An uptick in U.S. Treasury yields at mid-week is a daily negative for the precious metals markets. December gold was last down $1.20 at $1,933.70 and December silver was down $0.187 at $23.215.

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The just-released U.S. data point of the week saw the consumer price index report for August come in at up 3.7%, year-on-year, with the core CPI up 4.3% in the same period. The CPI was expected to be up 3.6%, year-on-year, versus a 3.2% rise in the July report. The core reading in July was up 4.7%. The metals and the general marketplace showed little reaction to the numbers.

Said Nigel Green of the deVere Group right after the CPI report: “The Federal Reserve will hold interest rates steady in September, before hiking them again next time. Inflation heated up again last month in the world’s largest economy, driven mainly by rising oil costs. This latest U.S. CPI data is unlikely to move the needle on the Fed’s highly anticipated move to hold rates steady at their meeting next week, which has already been priced-in by financial markets.” He added, “But the uptick in inflation gives the U.S. central bank extra reason to be hawkish moving forward. As such, we also expect the Fed will start to prepare the market for a rate increase at its November meeting.”

Asian and European stock markets were mostly down overnight. U.S. stock indexes are pointed to weaker openings when the New York day session begins.

The European Central Bank also holds its regular monetary policy meeting Thursday and is expected to slightly raise its main interest rate by 0.25 percent.

The key outside markets today see the U.S. dollar index slightly higher. Nymex crude oil prices are firmer and trading around $89.25 a barrel. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.31%.

Other U.S. economic data due for release Wednesday includes the MBA weekly mortgage applications survey, real earnings, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Tuesday’s high of $1,947.50 and then at this week’s high of $1,954.60. First support is seen at $1,925.00 and then at $1,913.60. Wyckoff’s Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bears have the overall near-term technical advantage. A bearish pennant pattern has formed on the daily bar chart. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at last week’s high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at this week’s high of $23.515 and then at $24.00. Next support is seen at $23.00 and then at $22.585. Wyckoff’s Market Rating: 3.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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