Gold, silver a bit firmer after tame U.S. inflation report

Gold and silver prices are slightly higher in choppy, two-sided trading at midday Thursday. The metals are supported by a U.S. consumer price index report that came in a bit tamer than market expectations. However, gains are limited as the U.S. dollar index has pushed well up from its early-session lows and as U.S. Treasury yields have up-ticked slightly. December gold was last up $2.30 at $1,952.60 and September silver was up $0.184 at $22.92.

The U.S. data point of the week saw the July U.S. consumer price index up 3.2%, year-on-year, which is slightly below the consensus forecast of up 3.3%. The CPI rose 3.0% in the June report. Meantime, the weekly U.S. jobless claims report came in a bit higher than expectations. These two reports fell into the camp of the U.S. monetary policy doves. Today’s data also suggests the Federal Reserve will not raise interest rates at its September meeting. The U.S. producer price index report is out on Friday morning.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock indexes are firmer at midday.

A Wall Street Journal headline today reads: “China slips into deflation in warning sign for World economy.” This follows a 0.3% drop in China’s consumer price index in July.

Another WSJ headline today reads: Sputtering trade fuels concerns about a fractured global economy.” This headline follows downbeat China import and export numbers reported earlier this week.

The summertime rally in the U.S. stock market has hit a speed bump, gold and silver prices have dipped, while grain markets have also sold off—all due in part to the slowing Chinese economy creating concerns about less demand for global supplies.

Look for China’s central bank to continue to implement economic stimulus measures in the coming weeks, in an effort to prop up the listing Chinese economy. Importantly, if the stimulus does not put a charge into the Chinese economy in the coming few months, the other major economies of the world will start to feel the sting of the slower China growth. Such a scenario would be significantly bearish for raw commodity markets, as China is a voracious consumer of raw commodities. Global stock and financial markets would also likely be negatively impacted by a weakening of the Chinese economy.

In the coming weeks, keep a closer eye on economic data coming out of China—because the “smart money” in the marketplace will be doing the same and acting upon that data.

The key outside markets today see the U.S. dollar index modestly lower after trading solidly lower and hitting new daily lows following the U.S. CPI data. Nymex crude oil prices are down and trading around $83.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 4.018%.

Technically, December gold futures prices hit a five-week low today. Bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at today’s high of $1,963.50 and then at Tuesday’s high of $1,972.80. First support is seen at $1,939.20 and then at $1,925.00. Wyckoff’s Market Rating: 4.0.

September silver futures prices hit a four-week low today. The silver bears have the overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $24.50. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at $23.255 and then at $23.50. Next support is seen at today’s low of $22.665 and then at $22.34. Wyckoff’s Market Rating: 4.0.September N.Y. copper closed down 125 points at 377.10 cents today. Prices closed near the session low. The copper bears have the overall near-term technical advantage. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at the July high of 402.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen today’s high of 383.15 cents and then at this week’s high of 387.70 cents. First support is seen at Wednesday’s low of 376.45 cents and then at this week’s low of 372.65 cents.