Gold Pushing Higher Following Inflation

Gold prices are continuing to push higher as we move through the back end of the week. Following a brief correction lower on Monday, gold demand has kicked back in with gold futures trading up to fresh highs for the week on Thursday. The rally comes amidst a softening in USD following some softer inflation data over the week.  Following a weaker set of PPI figures on Tuesday, yesterday’s CPI reading saw some undershooting on the monthly data, though the annualised figure rose in line with expectations. Following these released, rate cut pricing has risen across the March – June meetings, though June is still the favourite for now.

US Retail Sales Next

Looking ahead today, traders will be watching the latest set of US retail sales figures. Given the downside reaction we’ve seen this week, any further weakness today should be bearish for USD, leading gold higher, as rate-cut pricing creeps higher again. On the numbers front, the market is looking for core retail sales to rise but the headline figure to soften slightly. If confirmed, this should keep USD below recent highs into next week.

Fed’s Williams Notes Rising Uncertainty

Speaking last night, Fed’s Williams noted the heightened level of uncertainty in the economic outlook currently. With regards to rates, Williams noted that this uncertainty makes monetary policy guidance harder give. As such, Williams said the Fed’s decisions will remain highly data dependent and tied to developing risks.

Technical Views

Gold

The rally in gold has seen the market breaking above the bear channel from last year’s highs (bull flag break). Price is now fast approaching a test of the 2,718.88 level. A break higher here will be firmly bullish with 2,789.40 the next target for bulls. To the downside, 2,604.56 remains key support to watch.