Gold and silver see modest price gains; inflation genie lurking

April 27, 2021

New York (Apr 27)  Gold and silver prices are modestly up in early U.S. trading Tuesday. Bullish near-term technical postures continue to limit selling interest in the metals. The recently weaker U.S. dollar index is also an underlying bullish element for gold and silver. June gold futures were last up $1.70 at $1,781.60 and May Comex silver was last up $0.081 at $26.29 an ounce.

Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins.

The main U.S. economic event of the week will be the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Powell. While no change in U.S. monetary policy is expected, the marketplace will closely scrutinize the Fed’s inflation outlook and any comments on the future path of monetary policy.

Speaking of inflation, in the raw commodity world let’s take a peek at what’s going on in several markets. Corn futures prices just hit a nearly eight-year high overnight, and are trading above $7.20 a bushel. Soybeans are also at a nearly eight-year and high nearing $16.00 a bushel, and wheat futures are at an eight-year high above $7.50 a bushel. Hog futures are at 6.5-year high. Copper futures are at a 10-year high, Chinese steel futures are at record highs, coffee futures prices hit a nearly four-year high this week, and lumber futures are at record highs. For perspective in lumber, the last bull run in 2018 saw futures prices hit a then-record-high of $659.00 per thousand board feet. This week prices have skyrocketed to $1,420.00 and are still climbing. Many Americans who wanted to build new homes this year are putting it off because lumber prices are too high. Those who think consumer and producer price inflation won’t become problematic down the road my want to ponder this paragraph.

The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are higher and trading around $62.35 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.577%.  

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. house price index, the S&P-Case-Shiller home price indexes, the Richmond Fed business survey, and the consumer confidence index.

Live 24 hours gold chart [Kitco Inc.]

Technically, June gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,723.20. First resistance is seen at last week’s high of $1,798.40 and then at $1,800.00. First support is seen at this week’s low of $1,768.20 and then at last week’s low of $1,763.50.


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