Gold, silver hit 4-wk highs, more upside price action likely

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(Kitco News) - Gold and silver prices areposting modest gains in early U.S. trading Thursday and hit four-week highs overnight.The metals are being propelled higher by improving near-term chart postures, theU.S. dollar index backing down from its recent high, and by notions thatinflation will become more problematic in the coming months. December gold futureswere last up $2.60 at $1,797.30. December Comex silver was last up $0.115 at $23.28an ounce.

Globalstock markets were mixed but mostly higher in overnight trading. The U.S. stockindexes are pointed to higher openings when the New York day session begins. U.S.corporate earnings reports are featured this week.

TheU.S. data point of the day is the producer price index report for September,which is seen up 0.6% versus a 0.7% rise reported in August. The U.S. consumerprice index report on Wednesday ran a little hotter than expected. Meantime, inChina, its producer price index in September rose a record 10.7%, year-on-year.The August reading was up 9.5%. Recent inflation gauges from the major worldeconomies are suggesting higher inflation may be more than just transient, ashas been repeatedly suggested by Federal Reserve Chairman Jay Powell. Itappears gold traders may be finally realizing that rising inflationarypressures are bullish for metals, as history shows.

Thekey outside markets today see the U.S. dollar index lower. Nymex crude oil futuresare higher and trading around $81.30 a barrel. Meantime, the 10-year U.S. Treasurynote yield is presently fetching around 1.54%.

OtherU.S. economic data due for release Thursday includes the weekly jobless claimsreport and the weekly DOE liquid energy stocks report. Several Federal Reserve,IMF and World Bank officials are scheduled to speak today.

Technically,December gold futures bulls have gained the overall near-term technicaladvantage as prices are now trending higher on the daily chart. Bulls' next upsideprice objective is to produce a close above solid resistance at the Septemberhigh of $1,836.90. Bears' next near-term downside price objective is pushing futuresprices below solid technical support at this week's low of $1,749.90. First resistanceis seen at $1,810.60 and then at $1,825.00. First support is seen at today's lowof $1,787.60 and then at $1,775.00. Wyckoff's Market Rating: 6.0

The silver bears have still the overall near-term technicaladvantage. However, bulls are working on a fledgling price uptrend. Silver bulls'next upside price objective is closing December futures prices above solid technicalresistance at $24.00 an ounce. The next downside price objective for the bears isclosing prices below solid support at $22.00. First resistance is seen at $23.50and then at $24.00. Next support is seen at the overnight low of $22.925 andthen at $22.50. Wyckoff's Market Rating: 3.5.

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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