Gold, silver lose solid early price gains after U.S. CPI lifts U.S. dollar

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(Kitco News) - Gold and silver prices areposting slight gains in early U.S. trading Tuesday, after a brief rally thatpushed prices solidly higher just before a key U.S. inflation report wasreleased. The U.S. dollar index paring its overnight losses in the wake of theU.S. consumer price index report for September that was just a bit hotter thanexpected has taken some wind out of the sails of the precious metals marketbulls. Decembergold futures were last up $2.60 at $1,762.00. December Comexsilver was last up $0.216 at $22.73 an ounce.

Thefocus of the marketplace at mid-week is on the U.S. consumer price index reportfor September, which came in at up 0.4% from August and up 5.4%, year-on-year.The numbers were
expectedup 0.3% from August and up 5.3% year-on-year. Today's slightly warmer CPI dataarguably lands in the camp of the U.S. monetary policy hawks, who want to seethe Federal Reserve tighten its monetary policy sooner rather than later. TheU.S. dollar index gained some ground after the CPI report was released but isstill trading slightly down on the day. Rising energy costs and supply-chainbottlenecks in recent weeks have traders and investors even more keenly focusedon inflation prospects in the months ahead. The Federal Reserve will closely scrutinizetoday's CPI data as it mulls the timing of tapering its monthly government bondpurchases (quantitative easing).

Globalstock markets were mixed in overnight trading. The U.S. stock indexes are pointedto mixed openings when the New York day session begins.

Inovernight news, China reported its exports in September were up 28.1%, year-on-year,while imports were up 17.6%. The exports number was a bit higher than expectedand the imports number a bit lower than expected.

Thekey outside markets today see the U.S. dollar index just slightly lower butnearer the daily high. Nymex crude oil futures are weaker and trading around $80.00a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetchingaround 1.57%.

OtherU.S. economic data due for release Wednesday includes the weekly MBA mortgageapplications survey, the FOMC minutes and the monthly Treasury budgetstatement.

Technically,December gold futures bulls and bears are now back on a level overall near-termtechnical playing field. Bulls' next upside price objective is to produce a closeabove solid resistance at $1,800.00. Bears' next near-term downside price objectiveis pushing futures prices below solid technical support at the September low of$1,721.10. First resistance is seen at the overnight high of $1,778.50 and thenat the October high of $1,782.40. First support is seen at today's low of $1,758.00and then at this week's low of $1,749.90. Wyckoff's Market Rating: 5.0

The silver bears have the overall near-term technicaladvantage. Silver bulls' next upside price objective is closing December futuresprices above solid technical resistance at $24.00 an ounce. The next downsideprice objective for the bears is closing prices below solid support at theSeptember low of $21.41. First resistance is seen at today's high of $22.965 andthen at the October high of $23.22. Next support is seen at the overnight lowof $22.48 and then at this week's low of $22.325. Wyckoff's Market Rating: 2.5.

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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