Marketupdate | 13/09/2023

Gold falls ahead of today’s key US Consumer Price data, looks set to test $1900

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today’s Observations

Gold posted its high for the day of $1924 in early Asian trading on Tuesday and then came under downside pressure in Europe with the AM benchmark set at $1918.90 and the decline in value extended to a low of $1908 shortly after the New York opening amid reasonable trading volume. The yellow metal recovered into the close to end with a pared 0.47% loss at $1913 but has revisited Tuesday’s low this morning and looks set to challenge the psychologically important $1900 level following the MACD crossover sell signal that targets chart support pegged at $1885. The key focus for traders and investors is the latest US consumer price data due to be published shortly after the New York opening, an economic metric closely watched by the Fed in determining its’ monetary policy. Silver ranged between $23.19 and $22.87 before ending barely lower on the day at $23.07; Platinum posted an encouraging 1.22% gain to $912 and looks set for higher levels; Palladium rose 2.06% to $1241 and looks set for a significant short covering rally.

Market Commentary

September 13, 2023

• Gold prices slipped on Wednesday, although were trading above a more than two-week low hit in the previous session as investors await U.S. inflation data that could shape expectations around the Federal Reserve’s interest rate outlook.

• Spot gold dropped 0.2% to $1,908.70 per ounce by 0308 GMT, having touched their lowest level since Aug. 25 at $1,906.50 on Tuesday. U.S. gold futures slid 0.2% to $1,931.10.

• “Any upside surprises in the U.S. inflation data could have gold again being pressured below the $1,900 level,” KCM Trade Chief Market analyst Tim Waterer said in a note. With energy prices on the rise, expectations are for the headline inflation figures to come in stronger. “On the flip side, if the energy price impact is not as great as feared in the data, we could see a pullback in yields and a path opened higher for gold,” Waterer added.

• The U.S. Consumer Price Index (CPI) data due at 1230 GMT could offer some insights on what to expect from the Fed in terms of rate hikes. While the Fed is expected leave interest rates unchanged at its Sept. 19-20 policy meeting, the U.S. central bank will probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.

• The European Central Bank also expects inflation to remain above 3% next year, bolstering the case for a tenth consecutive interest rate hike on Thursday. Bullion is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.

• Spot gold may retest a support at $1,905 per ounce, with a good chance of breaking below this level and falling towards $1,898, according to Reuters technical analyst Wang Tao.

Economic Analysis

US consumer inflation expectations for the year ahead increased to 3.6% in August 2023 from 3.5% in July. It was the first increase in inflation expectations in five months. Year-ahead price growth expectations rose for gas (+0.4 percentage point to 4.9%), food (+0.1 percent point to 5.3%), medical care (+0.8 percent point to 9.2%), college education (+0.2 percentage point to 8.2%) and rent (+0.2 percentage point to 9.2%). Also, median home price growth expectations increased by 0.3 percentage point to 3.1%, its highest reading since July 2022. Meanwhile, median inflation expectations for five-year horizon increased by 0.1 percentage point to 3%. Conversely, three-year-ahead inflation expectations declined by 0.1 percentage point to 2.8%. source: Federal Reserve Bank of New York

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

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