Jump to content

Gold Prices Set to Rise on Baked in Fed Rate Hike Bets as CPI Looms


MongiIG

Recommended Posts

GOLD, XAU, RATE HIKE BETS, FED CHAIR POWELL, CPI, INFLATION - TALKING POINTS

  • Gold prices edge higher ahead of inflation data, Fed Chair Powell nomination
  • Aggressive Fed Bets may be fully priced in, allowing a path higher for gold
  • XAU/USD eyes major resistance after prices clear the 1800 psychological level
Gold Prices Set to Rise on Baked in Fed Rate Hike Bets as CPI Looms

Gold is off to a bright start this week as the metal trims steep losses from the prior week’s nearly 2% selloff. The threat of a more aggressive Federal Reserve dragged sentiment across the precious metals group. While a more hawkish Fed rate hike path still looks likely, gold is benefiting from an outsized move in inflation expectations.

Market-based inflation expectations, via breakeven rates, began to rise this week. Breakeven rates measure the gap between a Treasury yield and its inflation-indexed (real rates) counterpart. A rise in that measurement is friendly for gold given its inflation-hedging appeal. The fact that gold is now rising in the face of higher rate hike expectations may show that the current outlook of three possible rate hikes this year is baked into market expectations.

That said, bullion traders expect a busy week ahead, with inflation data set to cross the wires for the two largest economies: the United States and China. However, the US data is more likely to provide a directional driver for the yellow metal since gold is largely priced against the US Dollar. Analysts expect the consumer price index for December to rise to 7.0% from 6.8%, while the core measure – which strips out volatile food and energy prices – is set to cross the wires at 5.4%, up from 4.9%.

 

The confirmation hearing for Federal Reserve Chair Jerome H. Powell’s renomination to lead the Federal Reserve may provide another outlet to move gold prices. Mr. Powell is likely to succeed in securing his renomination, but lawmakers are expected to grill him over the sustained rise in prices that were being referred to as “transitory” just a few months ago. While no big surprises are likely from the Fed Chair’s hearing, the chance he could throw the markets a curveball can’t be ruled out.

As previously mentioned, however, the market appears to have already largely priced in the increase in hawkishness coming from Fed members. That said, Mr. Powell may be careful not to reinforce those hawkish perceptions any further, which makes a bearish surprise for gold minimal. Governor Lael Brainard will testify for the Vice Chair nomination. Her confirmation is also likely to succeed. The White House is expected to announce a candidate to fill her soon to be vacant spot, as well as two other vacancies, in the coming weeks.

XAU/USD TECHNICAL FORECAST

Gold is attempting to clear the 50-day Simple Moving Average after cleanly breaking above the psychologically imposing 1800 level. Major resistance around the 1830-1834 range that capped prices from July to September and again earlier this month remains the biggest near-term hurdle for bulls to clear. Alternatively, a break lower could see the 1800 level underpin prices, but an extended selloff would target the November and December lows at 1758.93 and 1753.10.

XAU/USD DAILY CHART

gold, xau, bullion, chart

Chart created with TradingView

Written by Thomas Westwater, Analyst for DailyFX.com. 11th Jan 2022.

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
  • image.png

  • Posts

    • Dopamine emerges as a beacon of innovation in the world of cryptocurrency management, offering a non-custodial, secure, and anonymous mobile app wallet. With over two million downloads and a robust user base, Dopamine is reshaping the landscape of decentralized finance (DeFi) on both Android and iOS platforms. Let's delve into the features and functionalities that make Dopamine a must-have tool for navigating the cryptocurrency market. Key Features: 1. Comprehensive Portfolio Tracking: Dopamine's native token, $DOPE, empowers users to monitor their favorite projects from a vast collection of over 10,000 coins, ensuring informed decision-making in the dynamic crypto market. 2. Enhanced Security Measures: With built-in Anti-Money Laundering services, Dopamine enables users to safeguard their assets by identifying potential fraud and assessing risk scores associated with their wallets. 3. Real-Time Market Insights: Stay ahead of the curve with Dopamine's ability to track market trends and identify coins making significant moves, ensuring users remain informed and proactive in their investment strategies. 4. Cross-Chain NFT Transactions: Seamlessly send and receive NFTs across various blockchains, including Ethereum, BSC, Fusion, and more, providing users with unparalleled flexibility and interoperability. 5. Efficient Information Management: Dopamine simplifies data management by allowing users to save essential information and access it instantly, streamlining their crypto journey with convenience and ease. 6. Convenient Fiat On-Ramp: Facilitating seamless transactions, Dopamine enables users to buy crypto directly from their credit or debit card within the app, eliminating the need for multiple platforms and intermediaries. 7. DeFi Gaming Integration: Dive into the exciting world of decentralized finance gaming with Dopamine, offering users access to a diverse range of DeFi games directly from the app, adding a touch of entertainment to their crypto experience. With its innovative features, commitment to user empowerment and upcoming listing on Bitget exchange, Dopamine stands as a revolutionary platform that caters to the diverse needs of cryptocurrency enthusiasts. As the cryptocurrency market continues to evolve, It remains at the forefront, providing users with a secure, versatile, and intuitive solution for managing their digital assets and exploring new horizons in decentralized finance.
    • Name of stock: Adventus Mining Name of Stock Exchange: TSX Leverage or Share dealing: Share dealing Ticker: ADZN Country of stock: Canada
×
×
  • Create New...
us