Today's focus in the gold market centers on key levels at 2355 and 2364, with a predisposition towards short positions as prices approach the critical level of 2364. Market sentiment is influenced by yesterday's data release, which exceeded expectations, alongside anticipation for the Consumer Price Index (CPI) report.
The Producer Price Index (PPI) for final demand rose by 0.5 percent in April, indicating upward pressure on inflationary trends. Federal Reserve Chair Jerome Powell reiterated concerns over inflation, emphasizing its slower decline than anticipated, which suggests a prolonged period of central bank policy stability.
Analysts forecast a 0.3% increase in CPI for April, translating to a year-over-year rise of 3.4%, with core CPI expected to increase by the same margin, reaching 3.6% year-on-year. Goldman Sachs anticipates a slightly lower increase in core CPI at 0.28%, aligning with a year-over-year rate of 3.61%. Their projections for headline CPI stand at a 0.37% increase, with a year-over-year rate of 3.42%, slightly below consensus estimates.
Looking ahead, analysts project monthly core CPI inflation to remain within the 0.25-0.30% range over the coming months, before gradually slowing to around 0.2% by the end of 2024. These forecasts provide valuable insights for traders navigating gold's price movements amidst evolving inflationary dynamics.
In summary, gold traders are eyeing short positions as prices near critical levels, while closely monitoring CPI data releases for potential market shifts. The balance between inflationary pressures and central bank responses will continue to shape trading strategies in the days ahead.