The US inflation report showed the highest level in 40 years. After that, gold prices hit an 11-month low in mid-week early US trades. Recent data suggest that the Federal Reserve will maintain its aggressive stance on tightening US monetary policy.
Gold price drops as US CPI is too hot
cryptocoin.comAs you can follow on Wednesday morning, the consumer price index report for June came in very hot with an annual increase of 9.1%. On the other hand, expectations were for an annual increase of 8.5%. Moreover, in the May report, the CPI increased by 8.6% year-on-year. Markets’ early reactions to the CPI report suggest that there is a 75 percent chance the Fed will have to raise rates by another 0.75 percent at its next FOMC meeting, July 26-27. The probability of a full 1.0% rate hike by the Fed at the meeting is 30%.
Senior analyst Jim Wyckoff looks at the technical view of gold prices. Gold bears for August futures are generally solid, according to the analyst. It also has short-term technical advantage. The bulls’ next upside price target is to produce a close above the solid resistance at $1,800.00. The bears’ next short-term bearish price target is to push futures prices below solid technical support at $1,700.00. The analyst draws attention to the following technical levels:
Initial resistance is at today’s high at $1,729.70. Then this week’s high is seen at $1,743. Initial support is seen at $1,700 followed by $1,685.
Gold prices technical analysis
Market analyst Christopher Lewis, on the other hand, analyzes the latest situation in the gold market as follows. At the $1,750 level for gold, we’ve seen sellers enter the market several times. For that, it’s an area that should continue to offer some noise. It looks like the market will not continue to see further declines. All in all, this is a market that I think will continue to see a lot of volatility, mainly because the US dollar is so strong. This will continue to cause major problems not only for gold markets but also for other commodities.
If we fall below the candle bottom, gold is likely to drop further. Maybe it will reach the $1,700 level. It is very important to pay attention to the level of $ 1,700. Because if we go down there it will lead to far more aggressive selling than anything I’ve seen. All in all, I don’t believe this market has the momentum to turn things around anytime soon, at least until it breaks well above the $1,800 level. This will almost certainly have to do with a massive reversal in the bond markets.
Looking at this chart, we will likely continue to see some noise. So be mindful of your position size. This is a market that I think continues to see a lot of dangerous noise. That’s why you don’t want to take an extreme position. Because whatever the next move, we are likely to see excessive noise and danger.
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