Gold Prices Hit 4-Mo. High, But Hotter CPI Tempers Gains

(Kitco News) - Gold pricesare moderately higher in early U.S. trading Friday, but off theovernight gains that notched a four-month high. U.S. consumer price inflationthat was a bit higher than expected helped to pull the gold market off itsovernight highs. However, gold and silver prices are being supported by aslumping U.S. dollar index and a surging Euro currency. February Comex gold waslast up $5.90 an ounce at $1,328.30. March Comex silver was last up $0.124 at$17.09 an ounce.

Thehighlight of a busy day for U.S. economic data was the release of the consumerprice index for December. The overall CPI was up 0.1%, which was in line withexpectations. However, the core rate-minus food and energy prices-came in at up0.3%, which was a bit higher than the up 0.2% that was expected. Gold pricesbacked off right after the release of the CPI data, which falls into the campof the U.S. monetary policy hawks, who want to see interest rates rise at afaster clip.

DecemberU.S. retail sales data was also released this morning, coming in at up 0.4%,which was in line with trade expectations.

OtherU.S. data due for Friday include real earnings, manufacturing and tradeinventories, and the IBD/TIPP economic optimism index.

Worldstock markets were mostly higher overnight. News that the German lawmakers haveformed a coalition government worked to lift the Euro currency to a four-yearhigh against the U.S. dollar, and also boosted the European stock markets. U.S.stock indexes are pointed toward firmer openings and new record highs when theNew York day session begins.

Thekey outside markets on Friday morning see the U.S. dollar index solidly lowerand at a 3.5-month low. The greenback bears have the solid overall near-termtechnical advantage, to suggest more pressure in the near term.

Meantime,Nymex crude oil prices are weaker on some profit taking after hitting athree-year high of $64.77 a barrel on Thursday. The U.S. government is expectedto rule on Friday whether it extends or waives economic sanctions against Iran.The recent rally in oil prices has been a positive development for the rawcommodity sector.

Inovernight news, China reported a record trade surplus with the U.S. in 2017, at$276 billion. China's total December imports were up 4.5%, year-on-year, whileits exports were up 10.9% in the same period.

Technically,Februarygold futures bulls have the firm overall near-term technical advantage.Prices are in a four-week-old uptrend on the daily bar chart. Bulls' nextupside technical objective is pushing and closing prices above chart resistanceat $1,350.00. Bears' next near-term downside price breakout objective isclosing prices below solid technical support at $1,300.00. First support isseen at the overnight low of $1,320.80 and then at $1,316.10. First resistanceis seen at the overnight high of $1,333.80 and then at $1,340.00. Wyckoff's MarketRating: 6.5

March silver bulls have the overall near-term technical advantage. Prices are stillin a four-week-old uptrend on the daily bar chart, but just barely. The nextupside price breakout objective is closing futures prices above solid technicalresistance at the October high of $17.59 an ounce. The next downside pricebreakout objective for the bears is closing prices below solid support at theOctober low of $16.435. First resistance is seen at the overnight high of $17.195and then at last week's high of $17.32. Next support is seen at this week's lowof $16.93 and then at $16.75. Wyckoff's Market Rating: 6.0.

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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