GOLD CONTINUES TO RANGE AFTER NFP AND CPI

Despite a disappointing NFP report and lackluster CPI release, gold remains in a tight trading range. Technical analysts predicted a potential surge to $2525 if the job data does not support the dollar, a scenario reflected in the charts. However, the all-time high of $2531 has proven to be a formidable resistance level, with the price struggling to break through. The market continues to show resilience and uncertainty amid economic data fluctuations.

FUNDAMENTAL:

Last Friday's job report showed a decrease in job creation, with 142k jobs added compared to the forecasted 164k. The US inflation data released yesterday caused market volatility, with US CORE CPI increasing by 0.1%. CPI m/m and y/y were in line with market expectations at 0.2% and 2.5% respectively. This led to a decline in the price of gold by -0.86%, dropping from $2,523 to $2,502.

In wake of these data releases, attention now tilts towards FED policy meeting next week. Yesterday inflation reading at 2.5% happens to be the lowest since February 2021, with this reading the FED is gradually approaching her 2% inflation target. Meanwhile analysts don’t think the recent data reading is enough to cause a bumper rate cut next week as market has priced in 15% for 50bps and 85% bps for 25bps at the next policy meeting.

UP COMING CATALYST:

As we progress through the trading week, all eyes are on the upcoming U.S Core PPI m/m, PPI m/m, and unemployment claims data, set to be released today at 4:30pm GMT +4. Attention will then turn to UoM consumer sentiment and inflation expectations on Friday, September 13th. These key indicators have the potential to drive the next market movement.

TECHNICAL ANALYSIS

Gold have been consolidating for some time now after it tested it’s all time high of 2531. The yellow metal since then have been ranging in-between 2528 and 2470. With 2528 serving as resistance, while 2470 serves as support. We really need a strong catalyst to see a breakout of these levels, will the FED policy meeting deliver this? We would find out in the coming week.

Price currently at $2517 but struggles to maintain momentum above $2528. Trading above the 50 period EMA signifies a bullish momentum and we have since been trading above the $2500 phycological level. 

In anticipation of the upcoming data readings, a strong dollar may lead to a potential decline in gold, with a target around $2500. Conversely, a weak USD could result in a surge in gold prices, with targets around 2525 and 2530, as suggested by technical analysts. Further breakouts beyond these levels are also possible.

Fig. 1 Gold Spot, Trading view, H4