Gold Solidly Up On Save-Haven Demand, Tame U.S. CPI

(Kitco News) - Gold pricesare solidly higher and back above $1,200.00 in early U.S. trading Thursday, onsafe-haven demand amid steep sell-offs in world stock markets that have spookedtraders and investors around the globe. A very tame U.S. inflation report isalso boosting the metals markets. And a lower U.S. dollar index today is alsoworking in favor of the precious metals bulls. December gold futures were last up$17.50 an ounce at $1,210.70. December Comex silver was last up $0.184 at $14.515an ounce.

Thejust-released U.S. consumer price index report for September came in at up ascant 0.1% from August, while expectations were for a 0.2% rise. Gold pricespushed to their daily highs on the data, which suggests U.S. inflation is notat all problematic and also hints the Federal Reserve could back off theaccelerator on raising U.S. interest rates.

Globalstock markets were hammered lower overnight, following the U.S. stock-marketpounding that took place Wednesday. China’s stock market dropped over 5% andhit a four-year low overnight. U.S. stock indexes are poised for sharply loweropenings and will be at three-month lows when the New York day session begins.You were warned in this report on Monday that the U.S. stock indexes wereshowing early clues of topping out. Price action Wednesday and today now morestrongly suggest the U.S. stock indexes have put in near-term tops, if notmajor tops. Such is a bullish development for the competing hard assets likethe metals.

Thesharp decline in the Chinese yuan against the U.S. dollar is in focus againlate this week. The depreciating yuan makes China’s exports cheaper on the worldmarket, but it also invites capital outflows from China. The U.S. has warnedChina about using its currency to gain world trade advantages.

Thekeen risk aversion now in the marketplace is also due in part to rising worldgovernment bond yields, with the implications being rising inflation along withthe negative impact on global stock markets. U.S. Treasury prices are actuallyhigher today, on safe-haven demand.

Discussionamong traders and investors now is whether the Fed will take its foot off thegas on raising U.S. interest rates. President Trump on Wednesday, following theU.S. stock market sell-off, said “the Fed is making a mistake” and “I think theFed has gone crazy.” Such rhetoric from the U.S. president will surely garnerthe attention of the Fed’s FOMC members who set interest rate policy.

Theother key outside market today finds November Nymex crude oil prices lower andtrading below $72.00 a barrel on concerns about slowing world economic growththat would mean less demand for oil.

OtherU.S. economic data due for release Thursday includes the weekly jobless claimsreport, real earnings, monthly retail chain store sales, and the weekly DOEliquid energy stocks report.

Technically,gold bears still have the firm overall near-term technical advantage. Goldbulls' next upside near-term price breakout objective is to produce a close in Decemberfutures above solid resistance at $1,220.70. Bears' next near-term downsideprice breakout objective is pushing prices below solid technical support at theAugust low of $1,167.10. First resistance is seen at the October high of $1,212.30and then at the September high of $1,218.00. First support is seen at $1,200.00and then at the overnight low of $1,194.70. Wyckoff's Market Rating: 3.0

Decembersilver futures bears have the solid overall near-term technical advantage.Silver bulls' next upside price breakout objective is closing prices abovesolid technical resistance at $15.00 an ounce. The next downside price breakoutobjective for the bears is closing prices below solid support at the Septemberlow of $13.965. First resistance is seen at $14.50 and then at Monday’s high of$14.70. Next support is seen at this week’s low of $14.255 and then at $14.195.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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