Today, gold has not shown much volatility and continues to move sideways around the 363x – 364x range, despite last night’s PPI data putting pressure on the USD.
Although the PPI data came in worse than expected, the fact that the Fed is almost certain to cut interest rates next week has attracted a massive inflow of $60 trillion into the U.S. bond market, locking in high yields before rates fall.
Weak labor market data and signs of an economic slowdown are forcing the Fed to cut rates by 25 – 50 basis points this year, with a potential total of 150 basis points in cuts next year. However, inflation could return at any time and reverse the market trend. Investors are becoming extremely cautious and increasingly turning to gold as a long-term defensive asset.
Today, the market’s focus is on the U.S. CPI data to look for signals of an earlier rate cut.
Currently, according to the FedWatch tool, the probability of a 25-basis-point rate cut has risen to 93.7%, while the probability of a 50-basis-point cut has dropped to 6.3%.
Technical analysis:
Gold remains in a short-term corrective channel. In the short term, once the CPI data is released, gold is likely to swing sharply in both directions.
Gold may drop to the $3,600/ounce level to fill the liquidity gap and establish a solid support zone before continuing its upward momentum toward retesting the previous peak, or potentially reaching a new high at $3,690 – $3,700/ounce.
Trí Hùng
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