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Gold Range Continues For Now
It’s been a frustrating few months for gold traders, with the market lacking volatility and price simply rotating within a narrow range. However, we could be on the brink of a turning point today as traders gear up for the latest US CPI data due this afternoon. Gold futures are trading a little higher ahead of the release, suggesting some expectation that a weaker reading is coming.
Forecasts For Today
On the numbers front, the market is looking for headline CPI to have cooled to 3.1% YoY last month, down from 3.3% prior. MoM, headline inflation is expected to tick up to 0.1% from 0% prior while core is expected to hold firm at 0.2%.
Market Implications
If seen, a fresh drop in inflation will help inflate near-term easing expectations, driving USD lower while creating room for gold prices to rally. However, if we see any surprise upside today, this will likely see gold prices come under pressure as traders scale back September easing expectations, sending USD higher.
Powell Highlights Two-Way Risks
Speaking this week, Powell reaffirmed the Fed’s support for keeping monetary policy at current levels for as long as necessary. However, Powell did acknowledge that there is plenty of two-way risk in the near-term outlook and cited evidence of a growing cooling trend in employment data. As mentioned at the last FOMC, inflation data remains paramount here and there is plenty of room for the Fed to turn more dovish or hawkish if we see any surprise in the data today.
Technical Views
Gold
For now, gold prices are sitting in the upper part of the 2,275.43 – 2,427.54 range with price having recently moved back above the 2,364.93 level. While above this level, the focus is on an eventual topside break to fresh highs. To the downside, range lows remain key support with the bull channel lows coming just beneath.
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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.