Gold Price Forecast: RSI Sell Signal Takes Shape Ahead Of US CPI

The price of gold extends the advance following the US Non-Farm Payrolls (NFP) report as longer-dated US Treasury yields remain under pressure, but the technical outlook is clouded with mixed signals as the Relative Strength Index (RSI) falls back from overbought territory to display a textbook sell signal.

Gold Bars

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Gold Price Forecast: RSI Sell Signal Takes Shape Ahead Of US CPI

The price of gold approaches the monthly high ($1917) as the 10-Year US Treasury yield slips to a fresh monthly low (1.54%), and fresh data prints coming out of the US may continue to sway gold prices as the Federal Reserve braces for a transitory rise in inflation.

The update to the US Consumer Price Index (CPI) is anticipated to show the headline print climbing to 4.7% in May from 4.2% the month prior, while the core rate of inflation is seen widening to 3.4% from 3.0% during the same period. It remains to be seen if the Federal Reserve will respond to the CPI as Cleveland Fed President Loretta Mester states that the NFP report is “solid,” but argues that there’s “further progress to be made” during a recent interview with CNBC.

The comments from Mester suggests the Federal Open Market Committee (FOMC) is in no rush to switch gears as “there’s several factors that are affecting labor supply,” and the central bank may continue to strike a dovish forward guidance at the next interest rate decision on June 16 as “various participants noted that it would likely be some time until the economy had made substantial further progress toward the Committee's maximum-employment and price-stability goals.”

Until then, the weakness in longer-dated US yields may keep the price of gold afloat as it extends the series of higher highs and lows from the June low ($1856), but the technical outlook is clouded with mixed signals as the Relative Strength Index (RSI) falls back from overbought territory to display a textbook sell signal.

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