Gold price rallies following tamer U.S. inflation report

(Kitco News) – Gold and silver prices are higher and have hit their session highs in early U.S. trading Thursday, boosted by a U.S. consumer price index report that came in tamer than market expectations. December gold was last up $10.30 at $1,960.40 and September silver was up $0.059 at $22.79.

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The U.S. data point of the week sees the July U.S. consumer price index up 3.2%, year-on-year, which is slightly below the consensus forecast of up 3.3%. The CPI rose 3.0% in the June report. Meantime, the weekly U.S. jobless claims report came in a bit higher than expectations. These two reports fall into the camp of the U.S. monetary policy doves. Today’s data also suggests the Federal Reserve will not raise interest rates at its September meeting. The U.S. producer price index report is out on Friday morning.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed to higher openings when the New York day session begins.

A Wall Street Journal headline today reads: “China slips into deflation in warning sign for World economy.” This follows a 0.3% drop in China’s consumer price index in July.

Another WSJ headline today reads: Sputtering trade fuels concerns about a fractured global economy.” This headline follows downbeat China import and export numbers reported earlier this week.

The summertime rally in the U.S. stock market has hit a speed bump, gold and silver prices have dipped, while grain markets have also sold off—all due in part to the slowing Chinese economy creating concerns about less demand for global supplies.

Look for China’s central bank to continue to implement economic stimulus measures in the coming weeks, in an effort to prop up the listing Chinese economy. Importantly, if the stimulus does not put a charge into the Chinese economy in the coming few months, the other major economies of the world will start to feel the sting of the slower China growth. Such a scenario would be significantly bearish for raw commodity markets, as China is a voracious consumer of raw commodities. Global stock and financial markets would also likely be negatively impacted by a weakening of the Chinese economy.

In the coming weeks, keep a closer eye on economic data coming out of China—because the “smart money” in the marketplace will be doing the same and acting upon that data.

U.S. Mint, Perth Mint see lackluster demand for gold, U.S. silver demand picks up

The key outside markets today see the U.S. dollar index solidly lower and hitting new daily lows following the U.S. data. Nymex crude oil prices are slightly down and trading around $84.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.986%–down a bit after today’s U.S. economic reports.

Other U.S. economic data due for release Thursday includes the monthly Treasury budget statement.

Technically, the gold futures bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. 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 the June low of $1,939.20. First resistance is seen at Wednesday’s high of $1,966.10 and then at Tuesday’s high of $1,972.80. First support is seen at this week’s low of $1,947.20 and then at $1,939.20.

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 September futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at $23.255 and then at $23.50. Next support is seen at the overnight low of $22.68 and then at the June low of $22.34.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com