U.S. Economic Data Impacting Gold and Silver Prices
Gold prices are near steady and silver prices are moderately down in midday U.S. trading Thursday, following a batch of U.S. economic data that showed an uptick for producer inflation and solid retail sales. Both reports fall into the camp of the U.S. monetary policy hawks, and that’s bearish for the metals.
December gold hit a three-week low today and was last down $0.10 at $1,932.40, while December silver hit a six-month low today and was last down $0.231 at $22.95.
The U.S. producer price index for August came in hot, at up 0.7% versus expectations for a rise of 0.4%. The ‘core’ PPI reading (that’s minus food and energy) was up 0.2%, which is right in line with market expectations. Meantime, U.S. retail sales in August were up 0.6% versus market expectations for a rise of 0.1%. These numbers suggest the Federal Reserve will continue to raise interest rates to choke off inflation, but also slow economic growth. That would likely mean less demand for raw commodities, including the metals.
China’s Monetary Policy and European Central Bank Update
In overnight news, China’s central bank is again easing its monetary policy, this time by cutting its reserve requirement ratio for banks by 0.25%, effective Friday. This move is aimed at reviving the world’s second-largest economy.
The European Central Bank held its regular monetary policy meeting Thursday and slightly raised its main interest rate by 0.25 percent, to 4.0%.
Market Outlook
The key outside markets today see the U.S. dollar index solidly higher after the stronger U.S. retail sales and hotter PPI. Nymex crude oil prices are higher and trading around $90.00 a barrel. Prices hit a 10-month high overnight. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.28%.
Technically, December gold futures prices hit a three-week low today. Bears have the firm overall near-term technical advantage. A four-month-old downtrend on the daily bar chart has been restarted. Bulls’ next upside price objective is to produce a close above solid resistance at the September high of $1,980.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Tuesday’s high of $1,947.50 and then at this week’s high of $1,954.60. First support is seen at today’s low of $1,921.70 and then at $1,913.60.
December silver futures prices hit a six-month low today. The silver bears have the overall near-term technical advantage and have momentum. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at this week’s high of $23.515 and then at $24.00. Next support is seen at today’s low of $22.555 and then at $22.25.
December N. Y. copper closed up 195 points at 381.25 cents today. Prices closed near mid-range. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls’ next upside price objective is pushing and closing prices above solid technical resistance at the September high of 390.85 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 367.00 cents. First resistance is seen at today’s high of 384.25 cents and then at 388.00 cents. First support is seen at 377.05 cents and then at 375.00 cents.
