Gold, silver see gains following mixed U.S. inflation data

(Kitco News, Tues. May 14th, 2024)  – Gold and silver prices are firmer in midday U.S. trading Tuesday following a U.S. inflation report that saw hot headline numbers, but the internals and revisions to the report were cooler. June gold was last up $10.70 at $2,353.70. July silver was last up $0.157 at $28.60.

Tuesday morning’s U.S. producer price index for April came in hot, at up 0.5%, month-on-month, versus expectations for up 0.3%. The “core” PPI rate (excluding food and energy) was also up 0.5% in April versus expectations for up only 0.2%. However, the March PPI number was revised to down to minus 0.1% from the originally reported up 0.2%. The April PPI report would have fallen squarely into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve hold off on any interest rate cuts. However, the big downward revision to the March PPI apparently mitigated the larger-than-expected jump in the April PPI.

The consumer price index comes on Wednesday. CPI is seen up 0.4%, compared to the March report showing a rise of 0.4%. The annual CPI April reading is seen up 3.6% compared to up 3.8% in the March report.

Federal Reserve Chairman Jerome Powell today spoke in Amsterdam to a banking group. Powell said inflation has been higher for longer than the Fed had expected and it looks like it will take longer for the Fed to become confident that inflation is coming down to 2% annually. He said the Fed will keep its restrictive monetary policy in place until inflation recedes to the Fed’s satisfaction. Powell’s comments came as no surprise to the marketplace and markets showed little reaction.

Asian and European stock indexes were mixed to weaker overnight. U.S. stock indexes are mixed near midday.

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are lower and trading around $77.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching around 4.5%.

Technically, June gold futures bulls have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,400.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at this week’s high of $2,370.80 and then at last week’s high of $2,385.30. First support is seen at this week’s low of $2,337.60 and then at $2,330.00.

July silver futures bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at last week’s high of $29.00. The next downside price objective for the bears is closing prices below solid support at $27.00. First resistance is seen at last week’s high of $29.00 and then at $29.25. Next support is seen at this week’s low of $28.185 and then at $28.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com