Summary:

• US industrial production falls in January
• -0.1% M/M vs 0.2% exp and 0.4% prior
• Strong reversal in Gold and Silver could lead to a break higher

The recent data form the US has been a little concerning for the markets with inflation seemingly picking up and retail sales disappointing. This afternoon has seen more bad news for the world’s largest economy with the latest industrial production figures showing an unexpected decline. In M/M terms the reading was -0.1% against consensus forecasts for a 0.2% increase after the prior reading showed 0.4% (revised lower from 0.9%). Industrial production has been diverging from the ISM manufacturing reading for a while now and this could be seen to suggest that there might be some weakness in the ISM going forward. 

 Industrial production continues to lag behind ISM and the latest reading was also a disappointment. Source: xStation

The recent batch of US data have seen some interesting moves in precious metals with Gold and Silver both making large gains yesterday. Beginning with Gold the market dropped sharply on the CPI release on Wednesday before reversing and ending the day with the largest gain in several months. Price could now be set to retest the yearly high at 1366 and should the market move above this level then a larger move to the upside may lie ahead. 

 Gold posting a large daily gain on Wednesday and could be set to retest the yearly high at 1366. Source: xStation

Silver also enjoyed a good day of gains yesterday and the market is approaching an interesting level on a D1 chart. 16.91 had previously acted as support before the strong declines on the NFP release saw the market made a break low and fall to 16.17. Should price be able to recapture this level then a move back towards 17.40 may be possible and should this hurdle be passed then 18.13 could be seen. 

 Silver has moved higher to retest the prior swing level at 16.91. Source: xStation