Gold Futures Rally After CPI Data

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Mar 14, 2024 12:04 AM

Gold futures are up 0.6% at $2,178.2 a troy ounce after yesterday's losses. Gold has rallied after yesterday's U.S. CPI data broke its nine-day streak of gains, now buoyed by a weaker dollar and persistent geopolitical tensions. Markets are pricing in around a 58.4% chance of a 25 basis-point rate cut by June, barely changed from before the CPI report. Aluminum is broadly flat at $2,263 a ton, though copper gains 3.3% to $8,933 a ton.

Gold Prices Fell on Tuesday

Gold prices fell on Tuesday after the U.S. government reported the biggest monthly rise in the consumer-price index since September. The CPI beat some forecasts by a small margin, but with gold having run so much higher so quickly, it is getting knocked back with hopes for a Federal Reserve rate cut anytime soon. Gold for April delivery was down $25.80, or 1.2%, at $2,162.80 an ounce on Comex. Prices had already lost momentum before the CPI print, and short term, the physical market will need to digest the flood of unwanted metal sold by Western funds, investors, and coin holders last week.

Gold and Silver Prices are Firm in Early U.S. Trading

Gold and silver prices are firmer in early U.S. trading on Wednesday, with bullish near term technical postures and friendly outside markets supporting mild buying interest in both precious metals. Bullish near term technical postures and friendly outside markets (weaker USDX and firmer crude oil) are supporting mild buying interest in both precious metals today. April gold was last up $2.60 at $2,168.70. May silver was last up $0.146 at $24.535. The marketplace has mostly digested Tuesday’s U.S. consumer price index for February that came in a bit warmer than expected, at up 3.2%, year on year, versus market expectations for a rise of 3.1%, and compares to a rise of 3.1% seen in the January report. The core CPI number for February was up 3.8% compared to expectations of up 3.7% and up 3.9% seen in the January report. The slightly warmer CPI readings followed the slightly warmer than expected CPI report for January. Thursday’s February producer price index report is now in focus. PPI in February is seen coming in up 0.3%, month on month, following a 0.3% rise in the January report. More warm U.S. inflation readings in the coming weeks may prevent the Federal Reserve from cutting interest rates as soon as it had just recently anticipated. Asian and European stock markets were mixed in overnight trading. U.S. stock index futures are set to open mixed when the New York day session begins. The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are higher and trading around $78.75 a barrel. The yield on the benchmark 10 year U.S. Treasury note is presently fetching 4.162%. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.

Technical Analysis of Gold Futures

Technically, the gold futures bulls have the solid overall near term technical advantage. A steep four week old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,250.00. Bears' next near term downside price objective is pushing futures prices below solid technical support at $2,100.00. First resistance is seen at $2,180.00 and then Tuesday’s high of $2,190.80. First support is seen at this week’s low of $2,156.20 and then at $2,150.00. Wyckoff's Market Rating: 8.0.

Technical Analysis of Silver Futures

The silver bulls have the overall near term technical advantage. Prices hit a 2.5 month high Tuesday. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $24.90 and then at $25.00. Next support is seen at this week’s low of $24.22 and then at $24.00. Wyckoff's Market Rating: 6.5.

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