Gold, Silver Gain On Weaker Greenback, Tame U.S. Inflation Data, Safe-Haven Demand

(Kitco News) - Gold and silver prices aremoderately higher in early-afternoon U.S. trading Thursday. The metals seeupside support from a bit of safe-haven demand, a lower U.S. dollar index, atame U.S. inflation report, and some short covering in the futures markets.June Comex gold futures were last up $6.90 an ounce at $1,319.80. July Comex silver was last up $0.191 at $16.73 an ounce.

TheU.S. economic highlight today saw the consumer price index for April come in atup 0.2%, month-on-month and up 2.5%, year-on-year. The numbers were expected tocome in up 0.3% from March, and up 2.5% at an annual rate. The “core” CPI rate,excluding food and energy, was up just 0.1% in April from March, and up 2.1%,year-on-year. The core rate rose 0.2% in the March report. Gold and silverprices moved higher after the release of this data, on ideas the Federal Reservemay not have to be so aggressive on raising U.S. interest rates, what with lowinflationary expectations.

Theoverall marketplace is not seeing a significant reaction from renewedSyria-Israeli military action, as both sides conducted air strikes against theother the past 24 hours. The military action is being called the heaviestbetween the two countries in decades. It appears the Middle East has once againbecome a geopolitical flashpoint for the markets. At present this is just amildly bullish element for safe-haven gold and silver, but it could become muchmore significantly bullish if the situation escalates.

Gainsin gold and silver were mitigated by higher U.S. stock indexes today. The U.S.stock market bulls are regaining upside momentum, as equity traders andinvestors don’t see much risk aversion in the marketplace. Again, that couldchange in a hurry given recent developments in the Middle East.

Theconclusion of the Bank of England’s regular monetary policy meeting today sawno change in U.K. interest rates, which was expected by the marketplace.

The“outside markets” today find Nymex crude oil prices modestly weaker on profittaking after hitting a new 3.5-year high overnight, and trading as high as $71.89a barrel. The U.S. dollar index is lower at midday on profit taking afterhitting a 4.5-month high Wednesday.

Technically,the gold bulls and bears are on a level overall near-term technical playingfield. A close below major psychological support at $1,300.00 would open thedoor to a larger leg down in prices in the near term. However, right now itappears that strong support level will hold. A bullish weekly high close onFriday would give the bulls upside momentum to suggest a near-term marketbottom is in place. Gold bulls' next upside near-term price breakout objectiveis to produce a close above solid technical resistance at $1,340.00. Bears'next near-term downside price breakout objective is pushing prices below solidtechnical support at $1,300.00. First resistance is seen at today’s high of$1,323.40 and then at $1,330.00. First support is seen at today’s low of$1,310.60 and then at the May low of $1,302.30. Wyckoff's Market Rating: 5.0

Silverprices were nearer the session high and hit a three-week high in afternoontrading today. The silver bears still have the slight overall near-termtechnical advantage, but the bulls gained some upside momentum today, tosuggest a near-term market bottom is in place. Silver bulls' next upside pricebreakout objective is closing prices above solid technical resistance at $17.00an ounce. The next downside price breakout objective for the bears is closingprices below solid support at the May low of $16.07. First resistance is seenat today’s high of $16.79 and then at $17.00. Next support is seen at today’slow of $16.50 and then at this week’s low of $16.335. Wyckoff's Market Rating:4.5.

JulyN.Y. copper closed up 480 points at 310.55 cents today. Prices closed nearerthe session high today. The copper bulls have regained the slight overallnear-term technical advantage. Copper bulls' next upside price objective ispushing and closing prices above solid technical resistance at the April highof 321.80 cents. The next downside price objective for the bears is closingprices below solid technical support at the March low of 295.85 cents. Firstresistance is seen at last week’s high of 312.15 cents and then at 315.00cents. First support is seen at today’s low of 305.20 cents and then at thisweek’s low of 301.40 cents. Wyckoff's Market Rating: 5.5.

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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