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Gold remained flat above key psychological $1,800 on Wednesday after a lower-than-expected rise in US inflation left it unclear on when the US central bank will begin to cut its asset purchases.

Warren Patterson: US CPI data should be pretty supportive for gold price

Spot gold held steady at $1,808.21 an ounce as of 06.10 GMT after hitting a one-week high of $1,808.50 on Tuesday. U.S. gold futures fell 0.2% to $1,804.30. ING analyst Warren Patterson commented:

With the CPI data coming in slightly lower than expected, it’s pushing a possible (tapered) announcement a bit further for some, and that should be pretty supportive for the gold price.

Underlying US consumer prices rose at the slowest rate in six months in August, reassuring the Fed’s view that high inflation levels are temporary, according to market analyst Eileen Soreng. The data also raised expectations that the Fed could slow in easing k support measures and keep interest rates near zero for a while. The US central bank will hold its two-day monetary policy meeting next week.

Gold could break support at $1,798, according to Reuters technical analyst Wang Tao

Gold tends to win when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. The CPI sent the dollar index to a one-week low on Tuesday, while the benchmark US 10-year yield hit its lowest since August 24. Michael Langford, Director of Corporate Consulting at AirGuide, commented:

I see gold holding above $1,800 as COVID-19 and the critical risks associated with underlying businesses encourage central banks to tap into the short-term main driver of gold prices.

Technically speaking, spot gold could break the support at $1,798 and drop to $1,792 after failing to clear the $1,807 resistance, according to Reuters technical analyst Wang Tao. Standard Chartered Bank precious metals analyst Suki Cooper commented:

Gold is playing at $1,800 after the slightly weaker-than-expected US inflation data. The macro backdrop remains favorable for further price increases.

OANDA analyst Ed Moya: US data below expectations is good news for bullion

Cryptocoin. com, the US core Consumer Price Index increased by 0.1% in August, falling short of the expectations of 0.3%, putting pressure on the US dollar. This was the smallest gain since February and came after a 0.3% gain in July. Evaluating the issue, Suki Cooper expressed her opinion as follows:

Staff forecasts or points for 2024 will be presented at the September meeting, although a contraction announcement is unlikely until the November FOMC meeting. The 2024 points could reflect two rate hikes of 2023.

Inflation data may strengthen the view that the Fed may slow down in loosening k support measures and keep interest rates low. Ed Moya, senior market analyst at OANDA brokerage, said this (US data) hijacking is “good news for bullion” because it makes the Fed’s announcement of a cut for September less likely.


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Michael Lewis

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