Gold Bounces on Weak USD

The move lower in USD over the last 24 hours has helped gold prices bounce somewhat. Gold futures were seen falling to fresh lows on the year this week as hotter-than-forecast US inflation drives the Dollar higher. However, with yesterday’s retail sales seen plunging into negative territory last month, the US Dollar has softened, allowing gold room to breathe. Looking Ahead today, however, there is plenty of risk with a slew of tier one US data to come.

PPI Up Next

US PPI will be up first and on the back of Tuesday’s inflation data the market is primed for a hot reading. If we see PPI rise last month as expected, market reaction is likely to be fairly contained. However, if we see PPI surprising to the upside, this is likely to drive fresh USD buying, reversing the current downturn. Following PPI, we have the UoM consumer sentiment reading. Given the plunge in retail sales this could well be a downside surprise today which should help temper USD if we do see an upside beat on PPI.

Fed Speakers Due

Along with these key readings, we also have building permits and housing starts along with Fed’s Barr and Daly due to speak. Traders will be keen to hear from policymakers given the mixed data we have seen this week with gold direction early next week likely to be determined by today’s moves.

Technical Views

Gold

The sell off this week saw price breaking down below the prior 2006.53 2024 lows. The decline stopped just short of testing support at 1973.51 and price is now turning higher again. With momentum studies bearish, price remains vulnerable to further downside here unless bulls can get firmly back above the 2006.53 level, putting focus back on 2069.41. 

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