Gold prices testing support around $1,650 as U.S. PCE rises 0.6% in September, in line with expectations

Nhe gold market is testing critical support around $1,650 an ounce as U.S. inflation pressure rise in line with expectations.

Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.5% last month, up from August's increase of 0.6%. The data was in line with expectations.

For the year, core inflation rose 5.1%, up from August's annual increase of 4.9%. Inflation was a tick lower as economists were expecting to see a 5.2% increase.

The data is adding some selling pressure to gold as it was already testing critical support levels. December gold futures last traded at $1,653.70 an ounce, down 0.71% on the day.

According to some economists, although inflation is not heating up more than expected, it is still persistently high and will force the Fed to aggressively raise interest rates. The CME FedWatch Tool shows markets see an 84% chance of a 75-basis point hike next week. Expectations are roughly 50/50 regarding a 50 or 75-basis-point move in December.

"Inflation costs remain high. There is still work to be done and the data, although steady month-on-month/quarter on quarter, is still elevated well above what the Fed would like it to be," said Greg Michalowski, currency analyst at Forexlive.com.

The report also noted that personal income also rose in line with expectations, increasing 0.4% in September, compared to August's 0.3% rise.

 

Although income isn't growing, consumers continue to spend, with personal spending increasing 0.6%, beating expectations. According to consensus forecasts, economists were looking for a 0.4% rise.

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold, silver in price downdrafts amid plunging oil, deteriorating charts

Gold and silver prices are sharply lower in midday U.S. trading Tuesday. A huge drop in crude oil prices that sees Nymex futures trading back below $100 a barrel is bearish for the metals markets and the entire raw commodity sector. The near-term technical postures for gold and silver have also deteriorated significantly recently, which is inviting the chart-based speculative sellers to step in. April gold futures were last down $34.60 at $1,926.20 and May Comex silver was last down $0.188 at $25.11 an ounce.

Global stocks markets were mostly lower overnight. The U.S. stock indexes are solidly higher at midday. Trader and investor risk appetite remains elevated, overall, but there are some glimmers of hope that are pressing oil and gold prices down and bond yields up. Russia-Ukraine talks are continuing despite Russia stepping up its war campaign against Ukrainian citizens. Also, reports said high-level U.S.-China talks on the matter Monday were constructive.

China has locked down more cities due to the Covid virus again spreading rapidly. That has put price pressure on raw commodity futures markets early this week, on notions of reduced demand coming from the world’s second-largest economy.

The U.S. data point of the week is the Federal Reserve’s FOMC meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the Fed will raise its Fed funds rate by 0.25%. The Fed and chairman Jay Powell’s comments on the war and inflation will be closely scrutinized by the marketplace.

Gold price and risk: metal off daily lows but surging yields, risk sentiment, and oil price crash weigh

Today’s latest U.S. inflation report out Tuesday morning saw the producer price index for February come at up 0.8% from January, which was just slightly less than expected. Still, the annual PPI rate is running very hot, at up 10%.

The key outside markets see Nymex crude oil prices sharply lower and trading around $96.50 a barrel. Crude prices have backed way off from last week’s 14-year highs. That strongly suggests oil prices may have put in at least near-term tops. The U.S. dollar index is a bit higher at midday. The benchmark U.S. 10-year Treasury note is presently yielding 2.10%. U.S. Treasury yields are on the rise and hit a 2.5-year high Monday.

Technically, April gold futures bulls have the overall near-term technical advantage but are fading fast. A V-Top reversal pattern appears to be forming on the daily bar chart and a six-week-old uptrend on the daily bar chart has been negated. Recent price action strongly suggests a market top is in place. 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 $1,900.00. First resistance is seen at $1,950.00 and then at today’s high of $1,956.90. First support is seen at today’s low of $1,908.60 and then at $1,900.00. Wyckoff's Market Rating: 6.0

May silver futures bulls still have the overall near-term technical advantage but are fading fast. A six-week-old uptrend on the daily chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at the March high of $27.495 an ounce. The next downside price objective for the bears is closing prices below solid support at $24.00. First resistance is seen at today’s high of $25.315 and then at $25.50. Next support is seen at today’s low of $24.75 and then at $24.50. Wyckoff's Market Rating: 6.0.

May N.Y. copper closed down 155 points at 450.65 cents today. Prices closed near mid-range today. The copper bulls have lost their slight overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 480.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.80 cents. First resistance is seen at this week’s high of 461.55 cents and then at 468.00 cents. First support is seen at today’s week’s low of 446.85 cents and then at 445.00 cents. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

David