Fed Easing in Focus
Gold prices are on watch today as traders await the latest US data due this afternoon. Both PPI and retail sales are on deck today and hold the potential to cause fresh market volatility on the back of the recent shift we’ve seen in traders’ Fed expectations. Following mixed labour market data last week, and some dovish comments from Fed’s Williams on Friday, market pricing for a December cut has jumped ack up to around 80% from sub-40% at the start of last week. With traders now once again expecting a further cut ahead of year end, gold prices have jumped this week with the futures market rising almost 2% on Monday. Looking ahead today, any further data weakness should see rate-cut expectations jumping again, leading gold prices higher as USD comes under pressure.
Today’s Data Expectations
On the numbers front, the market is looking for core PPI to rise to 0.2% from -0.1% prior with headline to rise to 0.3% from -0.1% prior. On retail sales, expectations are for core to drop to 0.3% from 0.7% with headline to fall to 0.4% from 0.6%. If seen, these figures should keep the current narrative intact with rate pricing likely to remain unchanged. With focus remaining on a December cut, USD should start to drift lower with gold rising further through the week. A downside surprise on either or both would be best case scenario for gold bulls with easing expectations likely to rise again if seen. Alternatively, any upside surprises today might blunt easing expectations a little, curbing the rally in gold as traders await further data on Wednesday.
Technical Views
Gold
The correction lower from record highs has seen the market settling into a triangular range in recent months. Given the bull trend, focus is on an eventual break higher and resumption of the bull trend with 4,247.34 the key hurdle to clear near-term. To the downside, if we break sub 3,908.90 this will turn focus to a test of deeper support at 3,652.34 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.