Gold After US CPI: decisive Moments in Focus. Despite a recent slowing in the rate of increases, gold’s upward trend continues.

Gold Value and price action estimation

As US debt limit negotiations go on, gold prices are still high ahead of important US inflation data later on Wednesday. Technical graphs provide no indication of a correction of the upward trend, thus the risks are skewed to the positive. Given the weak trend on upper period diagrams, the focus may instead turn to important support zones.  If price pressures increase more quickly.

Core inflation indicators like the CPI, PCE, and PPI indicate that inflationary concerns are easing yet are still far greater than the Fed’s 2% objective. Further details will be provided in this respect by US CPI index data that will be released later today. The core CPI is predicted to have slowed to 5.5% on-year in April from 5.6% in March. One-year overall CPI is anticipated to be constant at 5%.

CPI Graph

Source: Bloomberg

Gold Fundamental Focus

Last week, the Fed increased interest rates by 25 basis points, as predicted. Yet it signaled a break in the cycle of rate increases. According to CME’s FedWatch tool, investors are presently factoring in 75 basis points of rate reductions by the end of the year. A re-evaluation of Fed rate drop predicts may result. If the CPI statistics show that price pressures increased more quickly than anticipated this past month. Especially in light of Friday’s better-than-predicted US jobs report.

Any increase in pricing pressures might hurt gold by strengthening the US currency and US Treasury rates. On the other hand, an additional reduction of price pressures may put pressure on yields and the US dollar, Pushing gold closer to its historic high of 2072 set in 2020.

Technical Analysis

The color-coded candlestick graphs based on trending/momentum signals show that the trend on the daily technical graphs has been upward. Since the conclusion of 2022. Despite the recent slowdown in advances, the 4-hourly graphs of XAUUSD show that it hasn’t breached any key support. There is a significant buffer between 1970 and 2000. Which includes a horizontal trendline spanning mid-April close to 1970 through the 200-period MA.

If the signal (MACD) reaches an elevated high, that would be a significant indication for attention. Many of the worries would be allayed by a development like this.

The 61.8% prediction of the 2015-2020 swing indicates that a surge in upward momentum might take XAUUSD over the record peak of 2072 set in 2020 and possibly as far as 2250.

A lot would also rely on how the US debt limit negotiations go, which would maintain gold’s safe-haven status in the interim. According to US Treasury Secretary Janet Yellen, failing to increase the $31.4 trillion federal debt ceiling. This could have a significant negative impact on the US economy and the dollar’s status as the world’s reserve currency.