Traders finally seeking gold, silver as inflation hedge amid hot price data

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(Kitco News) -Formany gold and silver market bulls, it took a while for their markets to catchfire due to rising and even problematic inflation around the globe. However, atmid-week it appears traders are now seeking out hard assets in the form ofprecious metals, as an inflation hedge.

Wednesday’sU.S. consumer price index for October came in hot, at up 0.9% and up 6.2%,year-on-year. The CPI was expected to come in at up 0.6% from September and up5.9%, year-on-year. The October numbers are the highest U.S. CPI readings inover 30 years. Tuesday’s U.S. producer price index showed a rise of 8.6%,year-on-year.

Meantime,China’s producer price index on Wednesday was reported up 13.5% in October,year-on-year, and up from a 10.7% rise in September. That is the fastestfactory gate price rise on recent record. Extreme weather and coal shortagesare being reflected in China’s rising PPI.

Justrecently, several Federal Reserve officials seemingly grudgingly are comingaround to the notion that rising inflationary pressures are something more thanjust “transitory.”

Goldprices hit a five-month high Wednesday and silver notched a three-month high.Both metals have seen their near-term technical postures improve markedly,suggesting there is more room on the upside for prices.

Technically,December gold futures bulls now have the firm overall near-term technicaladvantage and have momentum. A five-week-old uptrend is in place on the daily barchart. Bulls’ next upside price objective is to produce a close above solidresistance at $1,900.00. Bears' next near-term downside price objective ispushing futures prices below solid technical support at the November low of$1,758.50. First resistance is seen at today’s high of $1,870.60 and then at$1,880.00. First support is seen at $1,839.00 and then at today’s low of$1.823.00.

The silver bulls alsohave the overall near-term technical advantage. Bulls have restarted asix-week-old uptrend on the daily bar chart. Silver bulls' next upside priceobjective is closing December futures prices above solid technical resistanceat $26.13 an ounce. The next downside price objective for the bears is closingprices below solid support at $23.00. First resistance is seen at $25.50 andthen at $25.75. Next support is seen at $24.50 and then at today’s low of$24.04.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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