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  • Gold has work to do on the upside – “Chances will lean to the downside on a clear break below the 1,200 figure.”
  • US  CPI  was weaker than expected with the headline at 2.7% y/y and core at 2.2%.
  • the USD rally is near its peak as valuations are getting stretched and positioning is lopsided.

Currently, gold is trading at $1,201.55/oz from an early Asia low of $1,200.98/oz and a  high of $1,202.14/oz. The price is building a bullish case but there is still a lot of work that the bulls need to do.  

Spot gold’s recovery attempts on to the $1,200 handle came into jeopardy on Thursday when it reached a high of $1,212.60/oz and supply stepped up to take the precious metal back down to $1,200/oz  where the metal stabilised and moved into close at $1,201.37/oz. Trump signalled that there has not been any real progress with respect to the US/China trade dispute and that Tweet overshadowed the outcome of the US CPI data. “The disappointment on CPI provides further evidence that the USD rally is near its peak as valuations are getting stretched and positioning is lopsided,” analysts at TD Securities explained. The weekly check-in on jobless benefits claims slipped but held near a 49-year low.  

US  CPI  was weaker than expected with the headline at 2.7% y/y and core at 2.2%. “Apparel costs were a big driver of the decline – but apparel will be caught square in the trade wars if Trump goes ahead with not only his proposed USD200bn of tariffs but his touted potential extra USD267bn on top of that,” analysts at ANZ explained.  

Gold levels

Valeria Bednarik, Chief Analyst at FXStreet explained that the metal is barely holding above the 1,200.00 level, and reentering the daily ascendant channel that broke yesterday, erasing the relevance of yesterday’s breakout. In the daily chart, the price is now a few cents above a flat 20 SMA, the Momentum indicator continues advancing modestly below its 100 level and the RSI turned lower, now at 49, offering a neutral stance:

“In the short term according to her, the 4 hours chart shows price barely holding above a congestion of directionless moving averages and technical indicators gaining downward traction but above their midlines. “Chances will lean to the downside on a clear break below the 1,200 figure.”

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