|

Gold Price Forecast: XAU/USD pressured on hotter than expected US CPI

  • Gold is under pressure on the back of the US CPI beat.
  • US yields and the US dollar take off, pressuring gold to the downside. 

The gold price has dropped on the back of the main event for the week's outcome in the US Consumer Price Index. The yellow metal has fallen to $1,645 while the high of the day has been $1,682.49. Eyes are on 28 September's lows of $1,614.

The US dollar, as measured by the DXY index has shot to a high of 113.888 from the lows of 112.69. US yields have shot higher as well, with the 10-year Treasury yield touching 4.09%.

US CPI comes in hot

The data arrived as follows:

  • US CPI (MoM) Sep: 0.4% (est 0.2%; prev 0.1%).
  • US CPI (Y0Y) Sep: 8.2% (est 8.1%; prev 8.3%).
  • US CPI Core (M0M) Sep: 0.6% (est 0.2%; prev 0.6%).
  • US CPI Core (Y0Y) Sep: 6.6% (est 6.5%; prev 6.3%).

Once again, hotter-than-expected US inflation numbers for both the core and headline measures are not seen as good news for the Federal Reserve or the US economy. US short-term interest-rate traders see about a one-in-ten chance of a 100-basis point fed rate hike in November, up from zero before the CPI report. Consequently, US Dow futures dropped more than 350 points after a hotter-than-expected inflation report.

''Inflation's rising persistence suggests the Fed is unlikely to stop hiking preemptively, which points to a prolonged period of restrictive rates,'' analysts at TD Securities said. ''This suggests traders should ignore gold's siren calls, as a sustained downtrend will likely prevail''

Meanwhile, more data will be coming in from the US tomorrow with US Retail Sales. ''We look for retail sales to gain further momentum in September, following a 0.3% MoM rise in August,'' analysts at TD Securities said. ''Spending was likely boosted by another increase in auto sales and the first gain in gasoline station sales in three months. Importantly, control group sales likely stayed subdued, while those for the restaurants' segment likely slowed to a crawl following a 1.1% jump in August.''

Gold technical analysis

The price is on the way to the bottom of the prior bullish run with the 28 September lows in focus. 

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary. 

Breaking: US and Israel attack Iran, risk aversion to sweep global markets

Early Saturday, United States (US) President Donald Trump announced that the US had begun “major combat operations” in Iran, following Israel’s pre-emptive missile attacks against Tehran.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.