Gold Rally Continues

Gold prices are trading higher through the middle of the week, spurred on by a weaker US Dollar. The greenback plunged yesterday in response to a cooler-than-forecast set of US inflation figures. US CPI was seen falling back to 3.2% YoY, down from 3.7% prior. The data has fuelled a pushback against Fed hawks with the market now discounting any further Fed tightening and instead looking to call the first Fed rate cuts next year. CME pricing currently favours a rate cut by the May 1st meeting. While this narrative remains in place, gold prices look likely to extend further as the US Dollar remains under pressure.

US Data Due – Retail Sales in Focus

Looking ahead today, focus will be on the next set of US data points with PPI, retail sales and empire state manufacturing all due. Of these, retail sales will likely be the focal point with both core and headline expected to have fallen into negative territory last month. If confirmed, this will keep USD pressured near term, maintaining the focus on rate-cut expectations, allowing gold prices to continue higher. Indeed, on the back of yesterday’s inflation reading, it would likely take some strong upside surprises across today’s data releases to fuel a USD uptick.  

Technical Views

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Gold

The reversal lower in gold saw the market breaking back under the 1973.51 level. However, the correction found demand and price is now turning higher and testing the level once again. If bulls break back above, the focus will be on 2069.41 next, in line with rising momentum studies readings. 

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