Fundamental Overview
Yesterday, we got a dovish reaction in the markets following the US PPI release where the data came in line with expectations. The reaction showed that even little signs of better inflation figures can trigger more bids for gold as Treasury yields and the US Dollar weaken as a result.
This will be important to remember in light of today’s US CPI report where in line or soft figures will likely lead to even higher prices for gold in the next days. Conversely, hot readings might have the opposite effect with gold selling off and possibly falling to new lows.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward around the 2150 level where we can find the confluence of the trendline and the 61.8% Fibonacci retracement level. Such a big drop though could be possible only if we keep getting high inflation data. For now, the buyers remain in control and the recent break above the 2352 level opened the door for a new all-time high.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently bounced around the 2330 resistance-turned-support where we had the confluence of the trendline and the 61.8% Fibonacci retracement level and started to rally as the US PPI report came in line with expectations. The price is now near the previous high and the upper bound of the average daily range, so further gains might be limited and from a risk management perspective, it might be better to wait for a pullback into the trendline.
Upcoming Catalysts
Today all eyes will be on the US CPI report although we will also get the US Retail Sales data at the same time. Tomorrow, get the latest US Jobless Claims figures where it will be interesting to see whether the last week’s numbers were the start of a trend or just a fluke.
