Gold Under Heavy Pressure from Oil; Will Tonight's US Data Push Prices to $3,885?
In Brief: New Price Buffer as Oil Soars: A renewed jump in crude oil (WTI) prices, driven by intensifying attacks on Middle East oil facilities and the lack of a ceasefire in Ukraine, has revived the inflation threat and once again put gold under selling pressure. Hot Outlook for US Inflation Data (Core CPI): Traders await tonight's inflation figures [...]
Gold Price's New Shocker With Oil Flight: Crude Oil (WTI) prices bounced again due to the intensification of attacks on Middle East oil facilities and the lack of a ceasefire in Ukraine, reviving the inflation giant, once again put gold under selling pressure.
Hot Outlook for US Core CPI: Traders are waiting for US monthly inflation data tonight; A figure equal to or higher than 0.4% could close the chance of another interest rate hike at the October meeting and push gold back to lower supports.
Key levels in technical analysis: A break of $4,110 support opens the way for a drop to $3,885, while buyers are lurking for a return to $4,228 and eventually $4,500 in case of weaker inflation figures.
The gold market once again experienced a new wave of selling pressure under the influence of the jump in oil prices and revival of inflation concerns. With the intensification of Houthi attacks on Saudi Arabia and the deadlock of Iran-US negotiations along with Russia's continued attacks on Ukrainian oil facilities, the price of crude oil has reached new heights. An event that strengthens the scenario of the Federal Reserve's interest rate increase, hinders the rise of gold. Join us at Safir Arjan to review the details of the market developments and the crucial US inflation statistics in this analytical report taken from the InvestingLive website.
Tonight, the US inflation statistics (CPI) will shed light on the price of gold
Today, traders are all focused on the US Consumer Price Index (CPI) report. The main focus of the market is on the monthly core inflation statistics (Core CPI); The measure by which Federal Reserve officials decide exactly when and how fast to raise interest rates.
Currently, the market only sees a 21% chance of a rate hike at the October meeting, as traders awaited the data to ensure no rate change. But the formula for gold movement tonight is very clear:
Growth of 0.4% or more: It would send a big shock to the market, greatly increase the chances of an interest rate hike in October and cause a big drop in gold prices.
Growth of 0.3% or less: Takes pressure off gold and could lead to an upward rally and temporary breathing room for buyers.
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Technical analysis of gold in 3 main time frames
1. Daily timeframe (big market picture)
Gold could not reach the daily downward trend line and due to the jump in oil prices, it changed course much earlier and went back down. As long as the price trades below this trendline, the sellers are in control of the market and their main objective is a drop to the support level of $3,885. Conversely, buyers must first conquer the $4,500 level to initiate a powerful rally to $4,700.
2. 4-hour timeframe (downtrend acceleration)
On the 4-hour chart, as soon as the price broke below the previous uptrend line, sellers' momentum increased. Currently, the $4,110 level serves as support. If the price reaches this level, buyers are likely to enter with the aim of returning to the $4,228 resistance. But the failure of this support will mean the bottom of the scale is heavier in favor of the sellers for a drop to $3,885.
3. 1-hour timeframe (short-term scenario)
In the 1-hour chart, a sub-downtrend line is formed, which plays the role of resistance. Sellers will use this trend line to push further into new lows. Buyers can hope for a price return to the $4,228 range only if this trend line breaks.
From the point of view of risk management, it is better for traders not to trade until the release of the US CPI statistics; Because inflationary surprises can invalidate all technical levels in an instant.
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Important events of the economic calendar for the rest of the week
In addition to today's CPI report, the economic calendar for the coming days also has important news to determine the next path of gold:
Today (Wednesday): Official US Consumer Price Index (CPI) report
Tomorrow (Thursday): Producer Price Index (PPI), retail sales and US unemployment claims
It remains to be seen whether the giant of inflation will push gold to new lows tonight, or whether softer statistics will give buyers a chance to rebuild.