Gold and Silver rallied on short term coverage after the hot US CPI

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(Kitco News) — Gold and silver prices are higher in midday U.S. trade Wednesday. Gold hit an 11-month low earlier today after a US inflation report released the hottest in 41 years, suggesting the Federal Reserve will maintain its aggressive stance on US monetary tightening. However, gold and silver prices reversed course later in the morning as the futures market bears decided to take some profits and did some short covering. August gold futures were last up $12.20 to $1,737.00. Comex September silver futures were last up $0.232 to $19.20 an ounce.

The US data point of the week, if not the month, saw Wednesday morning’s CPI report come out hot for June, up 9.1% yoy. An increase of 8.5% compared to the previous year was expected. In the May report, the CPI rose 8.6% annually. Early market reaction to the CPI report suggests there is a 75% chance that the Fed will have to make another 0.75% rate hike at its next FOMC meeting on July 26-27. There is a 30% chance that the Fed will make a full 1.0% hike at the meeting. Meanwhile, the Bank of Canada surprised the market today with a full 1.0% hike in its main overnight interest rate.

Global equity markets were mixed overnight. US stock indexes are lower at midday, shedding gains overnight after hot CPI report.

Traders were still buzzing about Tuesday’s big drop in crude oil futures prices, with Nymex futures falling to a 2.5-month low of $93.67 overnight. The slump in crude oil also dragged down prices in other major commodity markets. The weakening commodity sector is an early indication that inflationary pressures may have peaked.




Major outside markets are seeing lower Nymex crude prices today, trading around $95.50 a barrel. The US dollar index is weaker and hit a 20-year high early after the hot CPI report. The yield on the 10-year US Treasury is 2.943%.

Technically, August gold futures prices hit an 11-month low earlier today and reversed course to make a bullish “outside day” on the daily bar chart. Bears still have the solid short-term technical advantage. Prices are in a four month old downtrend on the daily bar chart. The bulls’ next upside target is to find a close above the solid resistance at $1,800.00. Bears’ next short-term downside target is to push futures prices below the solid technical support at $1,700.00. Initial resistance is seen at today’s high of $1,744.30 and then $1,750.00. Initial support is seen at $1,721.60 and then today’s low of $1,704.50. Wyckoff’s market rating: 1.5

Live 24 hour silver chart [ Kitco Inc. ]

September silver futures prices hit a two-year low on Tuesday. The silver bears have the solid short-term overall technical advantage. The silver bulls’ next upside target is to close above the solid technical resistance at $20.00 an ounce. The next downside target for the bears is a close below the solid support at $18.00. Initial resistance is seen at $19.50 and then $19.85. Next support is seen at $19.00 and then this week’s low of $18.63. Wyckoff’s market rating: 1.5.

September NY Copper closed up 330 points today at 332.05 cents. Prices closed near the session high and hit a 1.5 year low today. The copper bears have the solid short-term overall technical advantage. A steep five week old price downtrend is present on the daily bar chart. The copper bulls’ next price target is to push and close prices above the solid technical resistance at 385.00 cents. The next downside target for the bears is a close below the solid technical support at 320.00 cents. Initial resistance is seen at Tuesday’s high of 345.70 cents and then the weekly high of 352.05 cents. Initial support is seen at today’s low of 321.65 cents and then 315.00 cents. Wyckoff’s market rating: 1.0.



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