Slightly cooler U.S. CPI prompts price rallies in gold, silver

(Kitco News, Wed. June 12th, 2024) – Gold and silver prices are higher in early U.S. trading Tuesday, following a U.S. inflation report that came in tame. August gold was last up $15.60 at $2,341.90. July silver was last up $0.659 at $29.90.

The just-released consumer price index for May came in at unchanged, month-on-month and up 3.3%, year-on-year. Monthly CPI was seen up 0.1% and up 3.4%, annually. The core CPI (excluding food and energy) for May was up 0.2%, month-on-month and up 3.4%, annually. Both core numbers were also slightly lower than expected. This report falls into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve cut interest rates sooner rather than later.

The U.S. dollar index sold off sharply, U.S. Treasury yields fell and the U.S. stock indexes rallied after the CPI report, which suggests better consumer attitudes and better demand for goods and services, including the metals.

Now traders and investors await the Federal Open Market Committee (FOMC) meeting of the Federal Reserve that ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. New “dot plots” will also be presented this afternoon by the FOMC. No changes in U.S. monetary policy are expected at this week’s meeting but as always the rhetoric coming from the Fed will be parsed by the marketplace.

Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

In overnight news, China’s May consumer price index was reported up 0.3%, year-on-year, which is in line with market expectations. The January-May CPI was up 0.1% on an annual basis. Broker SP Angel said this morning in an email dispatch that China’s “weak consumer goods inflation fuels concerns over persistently weak demand and deflationary risks. Factory prices dropped for the 20th consecutive month, weighing on producers’ profits, the employment outlook and demand for new investment.”

The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are higher and trading around $78.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently at 4.297%–down from the 4.40 reading just before the CPI print.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.

Technically, August gold bulls have gained the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at last week’s high of $2,406.70. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the May low of $2,308.70. First resistance is seen at $2,350.00 and then at $2,375.00. First support is seen at the overnight low of $2,327.20 and then at Tuesday’s low of $2,314.50.

July silver futures bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the May high of $32.75. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at today’s high of $30.15 and then at $30.50. Next support is seen at this week’s low of $29.135 and then at $28.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com