Gold, silver see strong gains following cooler US inflation report

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(Kitco News) – Gold and silver prices are sharply higher in midday US trading Wednesday following a US inflation report that came in just a bit cooler than expected. A drop in the US dollar index and in US Treasury yields today also worked in favor of the precious metals market bulls. June gold hit a three-week high and was last up $30.20 at $2,390.10. July silver was last up $0.998 at $29.70 and hit a four-week high today.

This morning’s US consumer price index report for April saw CPI up 0.3% versus the consensus forecast of up 0.4% and compares to the March report showing a rise of 0.4%. The annual CPI April reading was up 3.4% and was forecast at up 3.6% and compares to up 3.8% in the March report. Traders and investors were thinking the CPI report might come in hot today, following the producer price index report for April that was out Tuesday morning and ran hot on inflation. Today’s CPI report falls into the camp of the monetary policy doves, who want to see the Federal Reserve cut interest rates sooner rather than later. That scenario is bullish for the precious metals, from a consumer and commercial demand perspective.

Asian and European stock indexes were mixed overnight. US stock indexes are solidly higher at midday.

Comex copper futures today hit a new record high of $5.1280 a pound. Tighter global supplies, better world economic growth, smelter issues in China, as well as rampant market speculation, are driving the red industrial metal’s price sharply higher. Could copper be the next cocoa? Cocoa futures last year at this time were trading around $3,000 a metric ton. In April, cocoa futures reached a record high of $12,261 a ton.

The key foreign markets today see the US dollar index solidly lower. Nymex crude oil prices are near steady and trading around $78.00 a barrel. The yield on the benchmark 10-year US Treasury note is fetching around 4.3% and down after the CPI report.

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Technically, June gold futures prices hit a three-week high today. The bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,448.80. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at $2,400.00 and then at $2,415.00. First support is seen at $2,365.00 and then at $2,350.00. Wyckoff’s Market Rating: 7.4.

July silver futures prices hit a four-month high today. The silver bulls have the solid overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the contract high of $30.19. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at $30.00 and then at $30.19. Next support is seen at $29.00 and then at today’s low of $28.675. Wyckoff’s Market Rating: 8.0.

July NY copper closed up 215 points at 491.65 cents today. Prices closed nearer the session low and hit a record high of 512.80 cents early on today. The copper bulls have the strong overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at today’s high of 512.80 cents. The next downside price objective for the bears is closing prices below solid technical support at 460.00 cents. First resistance is seen at 500.00 cents and then at 512.80 cents. First support is seen at today’s low of 481.40 cents and then at 475.00 cents. Wyckoff’s Market Rating: 9.0

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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