Daily Market Recap – GOLD Prices rise after US inflation

Core US consumer price inflation slowed sharply in August, suggesting that inflation has likely peaked even though it could remain elevated amid supply chain strains.

The consumer price index, excluding energy and food, rose 0.1% in a month after a 0.3% increase in July, the Labor Department announced. This is the smallest gain since February. On a yearly basis, it shows a 4.0% increase, after a 4.3% gain in July.

The overall CPI rose 0.3% last month after a 0.5% increase in July. On a 12-month basis, the increase was 5.3% compared to 5.4% in July.

In the bond markets, the yield on 10-year US Treasury bonds was down nearly two basis points to 1.3073% after the consumer price data.

The FOMC will meet next week to discuss its monetary policy and markets are concerned that an announcement to reduce asset purchases will be made at that meeting.

On the daily chart, gold prices are supported by a bullish oblique in place since March. The market once again looks set to trade sideways between the 1,828 and 1,767 levels.

In the short term, prices are locked in by the 50-period moving average around 1,805. However, a close above 1,830 would pave the way for a new wave of upside to recapture the next resistance levels at 1,862.

Looking at the weekly data, we are noticing the formation of a reversal pattern: an inverted shoulder-head-shoulder (IHS). This technical pattern suggests a bullish recovery may be on the table in the coming weeks.

 (Chart Source: Tradingview 14.09.2021)

Thus, a breach of 1,830 should allow the market to rally to 1,850 and then eventually towards the 1,910 mark. In this scenario a return to the historical highs would not be excluded in a long-term perspective.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.