Gold price rallies on tamer U.S. CPI data

(Kitco News) – Gold prices are solidly higher and hit daily highs in early U.S. trading Tuesday, following a key U.S. inflation report that came in slightly tamer than market expectations. Silver prices are also up. Short covering in the futures markets is featured in both precious metals markets, along with some perceived bargain hunting in the cash markets. December gold was last up $10.60 at $1,960.70. December silver was last up $0.417 at $22.785.

The just-released U.S. data point of the week saw the consumer price index report for October come in at up 3.2%, year-on-year. CPI was forecast at up 3.3%, year-on-year, versus a gain of 3.7% in the September report. The core CPI rate was up 4.0% in October, compared to the consensus forecast of up 4.1% and up 4.1% in the September CPI report. This data falls into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve halt its interest-rate-tightening cycle. U.S. Treasury yields solidly down-ticked on the CPI data and the U.S. dollar index sold off. The U.S. stock indexes rallied sharply on the CPI news.

Asian and European markets were mixed to firmer in overnight trading. Risk appetite has slowly crept back into the general marketplace recently, as there has been no major military escalation in the Israel-Hamas war, at least from the markets’ point of view.

U.S. President Joe Biden and Chinese leader Xi Jinping will meet Wednesday during the Asia-Pacific Economic Cooperation summit in San Francisco. The White House cited a resumption of U.S./China military communications as a priority. Iran is also on the agenda, including the question of Iran’s nuclear program. A potential thawing of heretofore icy U.S.-China relations also has traders and investors with more upbeat attitudes this week.

U.S. lawmakers are once again scrambling to pass a measure to fund the federal government. This time the deadline is midnight Friday. This is “old hat” for the marketplace and markets are so far not reacting much to a potential U.S. government shutdown.

The key outside markets today see the U.S. dollar index solidly lower.Nymex crude oil prices are slightly higher and trading around $78.25 a barrel. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.49%.

Other U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, the NFIB small business index and real earnings. Several Federal Reserve officials are also slated to speak today.

Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,975.00 and then at $1,985.00. First support is seen at $1,950.00 and then at this week’s low of $1,935.60. Wyckoff’s Market Rating: 5.0.

The silver bears have the overall near-term technical advantage. Prices are trending lower on the daily bar chart. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at the October high of $23.88. The next downside price objective for the bears is closing prices below solid support at the October low of $20.85. First resistance is seen at $23.00 and then at $23.50. Next support is seen at the overnight low of $22.15 and then at this week’s low of $21.925. Wyckoff’s Market Rating: 3.5.

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