Gold Holding Steady Ahead of US CPI Tomorrow
Pause Ahead of CPI Release
Gold prices are holding at the foot of the recent declines for now with price having settled into a block of consolidation over recent sessions. Mostly, this price action reflects uncertainty ahead of tomorrow’s headline CPI data (and Thursday’s follow-on PPI data). Market pricing for an October hike has plunged lower on the back of weak September jobs data though pricing for a December hike remains high. As such there is plenty of room for volatility into tomorrow’s data if we see data undershoot forecasts.
Inflation Forecasts
The market is looking for headline annualised CPI at 3.6% from 3.4% prior. If seen, gold is at risk of a fresh decline as USD rallies. However, with market pricing for a hike already at elevated levels, any USD rally might prove less exciting than bulls would hope for. Conversely, because of those elevated rate hike expectations, if data comes in below forecasts, this could lead to a sharp dovish repricing in rate expectations, fuelling a correction lower in USD and creating room for a push higher in gold. If data comes in below the prior reading, this would be the most bullish outcome for gold leading to the biggest downside impact on December rate hike pricing.
Technical Views
Gold
For now, gold prices remain tightly bound to the bull trend line from last year’s lows, underpinned by the 4,092.60 level and capped by 4,204.01. If break lower, 3,940.25 will be the next bear target while a topside move will turn focus to 4,389.25 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.