Gold market analysis: US CPI inflation shows weakness, gold rebounds sharply, provider FX678

On Tuesday (November 14), as the inflation data (CPI) released by the United States that day continued to decline, the price of gold rebounded sharply and rose by 0.86% on Tuesday, closing at $1,962.67 per ounce, hitting an intraday high of $1,970.59 per ounce.

The Bureau of Labor Statistics said on Tuesday that U.S. consumer prices were flat in October after rising 0.4% in September as gasoline prices fell. The Bureau of Labor Statistics also said that the Consumer Price Index (CPI) increased by 3.2% year-on-year in October, compared with the expected increase of 3.3%, and the increase in September was 3.7%. Core inflation also slowed to 4% from 4.1%, the lowest level since September 2021. The U.S. Consumer Price Index (CPI) showed that the pace of inflation slowed further in October, which increased the possibility that the Federal Reserve has completed its interest rate hike. To this end, U.S. bond yields fell sharply that day, with the benchmark 10-year U.S. Treasury bond yield recording its worst single-day performance in eight months after the release of inflation data. The U.S. dollar also fell sharply in the foreign exchange market on Tuesday, and spot gold suffered. The boost recorded a decent rebound. Next, the US producer price index (PPI) and retail sales data will also be released on Wednesday. If these reports point to slowing inflation and weak consumer data, gold’s rally could continue as markets further reinforce expectations that the Federal Reserve is ending its tightening cycle. In this way, a further peaking and decline in U.S. bond yields and a possible continued fall in the U.S. dollar will help reduce pressure on gold. However, we should also clearly see that although the inflation rate has continued to decline in recent times, and the core inflation rate has dropped to the lowest level in two years, it is still far from the Fed’s core inflation target (2%). distance. The expectation that the Federal Reserve will complete its interest rate hike cycle does not mean that a rate cut will soon follow. Because, to this day, the United States is still in a good position to achieve a soft landing for the economy, inflation is still stubbornly sticky, and the main officials of the Federal Reserve have left the door open to the option of continuing to raise interest rates if necessary, which shows that the current high interest rates The level may still need to be maintained for a long time. Therefore, one should remain cautious about gold investment sentiment and not be too optimistic.

On the daily chart, after a continuous rebound, the price touched near the previous pressure zone ($1970), and is still under pressure below the middle track of the Bollinger Bands. MACD (Moving Average Convergence and Divergence), RIS (relative strength) Index) technical indicators have not shown an obvious turning signal for the time being, and the trend is still inclined to continue to maintain a pattern of oscillation in a wide range. Continue to pay attention to the market impact brought by the US PPI (Producer Price Index) in the evening. If the data shows weakness, gold is expected to break through the 1970 resistance and rebound towards a higher first-line resistance level. On the contrary, gold is afraid that it will be suppressed by profits and fall back.

Wang Gang, Bank of China Guangdong Branch
These are my personal views only and do not represent the views of my institution.