Jump to content

Gold Prices Nervously Await US CPI. Will High Inflation Boost XAU/USD?


MongiIG

Recommended Posts

GOLD, XAU/USD, CPI, US DOLLAR, FED, TECHNICAL ANALYSIS - TALKING POINTS:

  • Gold prices marked time as traders await US CPI report
  • Elevated inflation may boost hawkish Fed policy estimates
  • That may send XAU/USD towards lows from September
Gold Prices Nervously Await US CPI. Will High Inflation Boost XAU/USD?

Gold prices marked time on Thursday as the yellow metal was influenced by diverging fundamental forces. The anti-fiat yellow metal tends to be quite sensitive to movements in the US Dollar and Treasury yields. When the latter two are moving in the same direction, that is when gold can have relatively stronger trends. In this case, the US Dollar gained as bond yields weakened.

This divergence left the metal in a consolidative state as traders await Friday’s US CPI report. Headline inflation is expected to clock in at 6.8% y/y in November from 6.2% prior. This would be the fastest pace in almost 40 years. The core rate, which strips out volatile food and energy prices, is anticipated to cross the wires at 4.9% y/y. The latter is already running around 30-year highs.

With inflation far above the Federal Reserve’s target of averaging 2% in the long run, another strong reading could further boost hawkish monetary policy expectations. The central bank may even speed up the pace of tapering asset purchases at this month’s interest rate decision. As such, this is leaving gold vulnerable to a combination of rising front-end Treasury yields and a stronger US Dollar.

Check out the DailyFX Economic Calendar for more key events!

GOLD TECHNICAL ANALYSIS

On the 4-hour chart, XAU/USD has broken under a near-term rising trendline from the beginning of this month. This leaves gold facing the 1771 inflection point, with the key 1757 – 1763 support zone immediately below. A drop under the latter may open the door to extending losses towards the September low. Otherwise, immediate resistance seems to be at 1793.

 

XAU/USD 4-HOUR CHART

Gold Prices Nervously Await US CPI. Will High Inflation Boost XAU/USD?

Chart Created Using TradingView

GOLD SENTIMENT ANALYSIS - BEARISH

According to IG Client Sentiment (IGCS), about 83% of retail traders are net-long gold. IGCS tends to be a contrarian indicator. Since most traders are biased to the upside, this suggests prices may fall. Moreover, upside exposure increased by 0.75% and 1.30% over a daily and weekly basis respectively. The combination of overall positioning and recent shifts are offering a bearish contrarian trading bias.

Gold Prices Nervously Await US CPI. Will High Inflation Boost XAU/USD?

*IGCS chart used from December 9th report

Written by Daniel Dubrovsky, Strategist for DailyFX.com. 10th December 2021

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,258
    • Total Posts
      90,864
    • Total Members
      41,361
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Trace1010
    Joined 05/02/23 00:32
  • Posts

    • HI,  Please if any IG supporting staff can answer the questions below? 1. in the upcoming AMC/APE vote on 14 March 2023, can shareholder that hold AMC and APE at IG able to make a vote? I also have AMC and APE at IBKR and they did send out a notification to inform me that I can do proxy vote. Will IG do the same? 2. the upcoming vote is to determine APE covert back to AMC then do reverse spilt. Last year after APE issued, IG staff told me that they have to move APE to share dealing account from my ISA account as ISA is not eligible to hold APE (which is completely unbelivable, my APE at AJ Bell and HL are still sitting in ISA account). Anyway, if the conversion and reverse spilt is going to happen, will IG move my APE back to ISA account for the corporate action? Many Thanks
    • The epidemic in recent years has produced profound changes in people's lifestyles, and many of their activities have started to be developed in the virtual world, which plays an important role in promoting the development of the universe of meta. Games, as an important part of the universe of meta, will be the first industry to gain the benefits , but the following conditions are still indispensable for blockchain games to achieve better development.   - Wallets and Exchanges. Through the use of wallets, game users can truly take control of the assets in the game, and exchanges provide a trading platform and liquidity for these game assets NFT, helping users trade and revitalize their game assets. Wallets are a key application for depositing blockchain assets. Currently, wallets such as Metamask are not enough to support the extensive adoption of block games, and wallets will further advance community drive the popularity of blockchain games.  - Game playability. The biggest difference between blockchain games and traditional games is that gamers are also investors. Many blockchain games have gone out of course, treating all users as investors only and forgetting that the essence of making games is to develop high-quality games that users are interested in paying for. If most people play a game just to make money, and no one is ready to pay for it, it becomes a side-scam. The revenue of the participants of the side scam comes from the money of the people who come later, and if there are not enough people who come later, they will not be able to cash in the revenue, leading to the breakdown.  - Speed and performance. A high level of concurrency is the characteristic of game applications, so Wax, Coinan Chain and Polygon, which are public chains with a high level of concurrency and low fees, have attracted a large number of game developers. In the future, with the maturity of technologies such as Ethernet Layer 2 and slice scaling, as well as the maturity of other gaming public chain technologies compatible with EVM, blockchain games will have a better development and operation environment.  - Cross-chain and interaction. Cross-chain and interaction of game assets will be a direction of future development of metaverse games, and blockchain should be connected and accessible like the Internet. The maturity of cross-chain technology in the future will promote the cross-chain transfer of game assets and NFT, and improve the interaction experience of the system                                                                                     The game should maintain the operation of the project by relying on the payment of some users or selling profitable products, just like the new blockchain game Fairy Cat in 2023, which developed diverse gameplay for players and increased the playability of the game, thus got the recognition of many players. Blockchain games need to work hard on game experience and playability. Token economics is essentially just a kind of interest structure , and even good token economics cannot replace the development, operation and profitability of the project itself. It is believed that with the maturity of the above conditions, more and more game developers and investors will enter this industry and together promote the production of some blockchain games with beautiful graphics, first-class experience and high playability.
    • Hello, Is any interest paid on "available" cash (not "margin") in a spread betting account? For example, if I held £10k in an account and had no open positions. The reason for asking is that I understand that proceeds from short sales in a CFD will receive interest (benchmark-2.5%), so was wondering if that applied to all cash, and couldn't find an answer on the web site.   Thanks.
×
×
  • Create New...