Gold price up on ideas Fed closer to ending rate hikes

(Kitco News) – Gold and silver prices are are slightly higher and hit three-week highs in early U.S. trading Thursday. A tame U.S. inflation report has the marketplace thinking the Federal Reserve may be about done raising interest rates. That’s bullish for commodity markets, including the metals. August gold was last up $2.30 at $1,964.00 and August gold was up $0.18 at $24.49.

The marketplace is still basking in the glow of a tame U.S. inflation report that came out Wednesday morning. Said analyst Nigel Green of the deVere Group: “The U.S. is now likely to pull off the perfect ‘soft landing,’ with the world’s largest economy avoiding a recession as the latest inflation data comes in cooler than expected. The U.S. CPI data raises hopes that the Federal Reserve is going to be able to bring down inflation without steering the U.S. economy into a recession. The battle on rising prices is being won, as the data suggests, meaning the pressure is off the Fed for future rate hikes. Cooling inflation and a strong and resilient labor market suggest that no recession will come in 2023.” That’s a bullish scenario for commodity markets, suggesting better demand in the coming months.

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

In overnight news, China’s exports in June fell a worse-than-expected 12.4%, year-on-year, following a drop of 7.5% reported in May. Imports in June dropped a worse-than-expected 6.8%, year-on-year. That dour news from the world’s second-largest economy has so far put only a slight damper on raw commodity markets today.

The key outside markets today see the U.S. dollar index lower and hitting a 15-month low in early U.S. trading. That’s bullish for the raw commodity sector, as most raw commodities on world trade markets are priced in U.S. dollars. The weaker USDX makes those commodities less expensive to purchase in non-U.S. currency. Meantime, Nymex crude oil prices are slightly up and trading around $76.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.822%.  

U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index and the monthly Treasury budget statement.

Technically, the gold futures bulls and bears are back on a level overall near-term technical playing field but the bulls have momentum. A nine-week-old price downtrend on the daily bar chart has been negated. 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 $1,900.00. First resistance is seen at the overnight high of $1,967.80 and then at $1,975.00. First support is seen at the overnight low of $1,959.90 and then at $1,950.00. Wyckoff’s Market Rating: 5.0

The silver bulls have gained the slight overall near-term technical advantage. A three-week-old uptrend is now in place 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 $23.00. First resistance is seen at the June high of $24.835 and then at $25.00. Next support is seen at the overnight low of $24.31 and then at $24.00. Wyckoff’s Market Rating: 5.5.