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(Kitco News) – Gold and silver futures prices are lower and near daily lows in early U.S. trading Thursday, in the immediate aftermath of key U.S. inflation data that is running hot and at a 40-year high. April gold futures were last down $11.10 at $1,825.40 and March Comex silver was last down $0.106 at $23.26 an ounce.
The U.S. data point of the week is Thursday morning’s consumer price index report for January, which came in at up 7.5%, year-on-year. The marketplace expected CPI to be up 7.2%. This report is the hottest U.S. inflation reading since 1982. This data falls into the camp of the U.S. monetary policy hawks, who want to see an aggressive pace of Federal Reserve interest rate increases this year. U.S. Treasury yields spiked higher after the report, which is helping to pressure the metals markets.
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
In overnight news, the European Union is expecting Euro zone inflation to be up 3.5% in 2022 and up 1.7% in 2023. Given recent inflation data it appears EU economic officials are well behind the curve on recognizing the present pace of inflation.
Bloomberg this week interviewed a Goldman Sachs analyst, Jeff Currie, who pointed out major raw commodity futures markets are presently seeing the most “backwardation” since 1997—19 out of 28 markets. Backwardation means nearby futures trading at a premium to the deferred contracts. Usually, deferred futures are higher-priced, due to a “carry” premium. Backwardation suggests strong near-term demand for the commodity. “We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it,” said Currie. Futures curves are pricing in shortages, the likes of which not seen in 30 years, he added. Crude oil prices are leading the raw commodity price surge. Thus, crude will be a very important market for metals traders to monitor in the coming months.
The key outside markets today see crude oil prices higher and trading around $90.50 a barrel. The U.S. dollar index is up early today. The U.S. Treasury 10-year note yield is presently fetching 1.994%–the highest in over two years.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.
Technically, the April gold futures bulls have the overall near-term technical advantage and are having a good week. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,856.70. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at the overnight high of $1,837.30 and then at $1,850.00. First support is seen at Tuesday’s low of $1,816.00 and then at this week’s low of $1,807.50. Wyckoff’s Market Rating: 6.5
March silver futures bears have the slight overall near-term technical advantage. However, the bulls are having a good week and have momentum on their side. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $23.48 and then at $23.75. Next support is seen at $23.00 and then at Tuesday’s low of $22.77. Wyckoff’s Market Rating: 4.5.
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