Gold sees price gains following as-expected U.S. inflation report

(Kitco News, Tues. June 13th, 2023) – Gold prices are higher and extended early gains in early U.S. trading Tuesday, following a U.S. inflation report that came in very close to market expectations. A lower U.S. dollar index and higher crude oil prices are bullish daily outside market elements for the precious metals markets. August gold was last up $11.70 at $1,980.70 and July silver was up $0.326 at $24.385.

The just-released U.S. consumer price index report for May showed a rise of 4.0%, year-on-year, the same as in the April report and right in line with market expectations. Other internals of the CPI report also came in about as expected. The marketplace is a bit upbeat on the CPI numbers, as they were not a negative surprise on the U.S. inflation front. Wednesday morning’s U.S. producer price index report for May is seen down 0.1%, month-on-month.

Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.

In overnight news, China’s central bank eased its monetary policy by trimming a key lending rate. The central bank cut its seven-day reverse repurchase operations to 1.9% from 2.0%. This latest move is a further attempt by the Chinese government to boost Chinese economic growth, which is slowing.

The U.S. data point of the week is the FOMC meeting of the Federal Reserve, which begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. A majority of the marketplace still thinks the Fed will pause in its interest-rate-tightening cycle. Today’s as-expected CPI report falls into the camp of those expecting the Fed to pause at this week’s FOMC meeting.

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The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are higher and trading around $68.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.709%.

Other U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sale report, the NFIB small business index and real earnings. U.S. Treasury Secretary Janet Yellen speaks to a House of Representatives committee today on the health of the international financial system.

Technically, the gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in August 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 May low of $1,949.60. First resistance is seen at last week’s high of $1,987.80 and then at $2,000.00. First support is seen at this week’s low of $1,963.10 and then at the May low of $1,949.60.

The silver bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing July 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 May low of $22.785. First resistance is seen at last week’s high of $24.62 and then at $25.00. Next support is seen at $24.00 and then at $23.50.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com