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Price of Gold Fundamental Daily Forecast – Strong CPI Data Could Sink Gold

James Hyerczyk
Gold prices broke out following softer than expected consumer inflation figures.  U.S. yields eased allowing the dollar to soften paving the way for higher gold prices.  Prices are poised to test resistance near the September 25, highs at 1,316.  Support is seen near the 10-day moving average at 1,282. Momentum has turned positive as the … Continue reading Gold Price Prediction for October 16, 2017

Gold traders ignored the rebound in the U.S. Dollar on Thursday to finish at more than a two-week high as the focus for traders shifted to U.S. inflation figures due on Friday which are expected to give more clues on monetary policy.

After rallying most of the week, gold investors are looking for a little direction. Stronger consumer inflation data on Friday could create resistance for the precious metal along with increased demand for higher risk assets, a firmer U.S. Dollar and rising Treasury yields.

Geopolitical uncertainty over North Korea and political issues in Washington and parts of Europe could underpin gold prices as well as weaker-than-expected consumer inflation data.

Although gold didn’t react to the movement in the U.S. Dollar on Thursday, it still should be noted.

The U.S. Dollar rebounded on Thursday after being pressured most of the week. The catalyst behind the rally was a report showing a rise in U.S. producer inflation. This news somewhat offset the weakness caused on Wednesday by the U.S. Federal Reserve monetary policy meeting minutes that showed policymakers were concerned about the impact of low inflation on the economy.

The minutes from the September Fed meeting showed that many Federal Open Market Committee members still believed that another rate increase this year “was likely to be warranted, but there were a few members who said additional tightening depended on upcoming inflation data.

On Thursday, the Greenback was underpinned against a basket of currencies after the Labor Department said its producer price index for final demand increased 0.4 percent last month after rising 0.2 percent in August.

Forecast

Gold traders face a slew of U.S. economic data on Friday with the highlight of the day the report on U.S. consumer inflation.

U.S. CPI is expected to come in a 0.6%. Core CPI is forecast at 0.2. Core Retail Sales are forecast at 0.9% and Retail Sales are expected to rise by 1.7%.

Additional reports include Preliminary University of Michigan Consumer Sentiment and Business Inventories.

The chances of a Fed rate hike in December are about 85% to 90%. A better-than-expected CPI figure will likely mean there will be no doubt the Fed is going to raise rates.  This should pressure gold prices although losses could be limited by concerns over North Korea and President Trump’s ability to pass tax reform.

 

This article was originally posted on FX Empire

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