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Gold Prices May Rise Again if US PPI Data Disappoints – By ASC


Gold, XAU/USD, Inflation, Real Yield, producer prices – Discussion Items

  • Gold rose when CPI data hinted that inflation may have peaked
  • The US producer price index (PPI) may influence ingot prices further
  • XAU rose above January highs, potentially driving further gains

Gold prices recorded an overnight rebound after inflation cooled slightly in the United States, according to the latest consumer price index (CPI) for April. CPI crossed the wire at 8.3% on a year -on -year basis. That’s higher than Bloomberg’s consensus estimate of 8.1%. However, it is slightly lower than the 8.5% y/y March figure.

The reaction in gold may be due to the behavior of the Treasury market. The real result – the main driver of the price of ingots, falling following the printing of the CPI. Lower real yields benefit gold because it is a non -profit asset, which reduces the opportunity cost of gold. The 10 -year inflation index rate fell 15 basis points overnight but remained in positive territory. The yellow metal may continue to gain if actual yields decline further.

Tonight will bring US producer price index (PPI) data for April. Analysts saw the PPI cool to 0.5% on a month -over -month basis, according to a Bloomberg survey. That would be down from 1.4%, representing a fairly significant production. This may help to allay inflation concerns, as factory door prices are sometimes seen as a key indicator for downstream inflation. Gold may move higher if tonight’s data is below expectations.

XAU/USD Technical Forecast

Gold prices moved above the January high swing through Asia-Pacific trade, levels that have previously provided support. Holding that level could trigger further bullish energy to drive prices higher. If so, the falling 20 -day Simple Moving Average (SMA) may limit the upside. Meanwhile, the MACD and RSI oscillators seem to be improving.

XAU/USD Daily Chart

xau card

Charts made with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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