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MTrading Team • 2024-03-12

Gold retreats from technical resistance ahead of US CPI

Gold retreats from technical resistance ahead of US CPI

The risk appetite appears dicey early Tuesday as traders keenly await the key US inflation data per the Consumer Price Index (CPI) gauge for February. Also challenging the market’s previous optimism could be the realty sector woes in China and consolidation ahead of next week’s FOMC, especially when the Fed officials undergo a blackout period.

Even if the US Dollar edges higher, the EURUSD refrains from extending the two-day losing streak amid hawkish comments from the European Central Bank (ECB) officials. However, GBPUSD stretches the previous day’s retreat from the yearly high despite Bank of England (BoE) official’s comments favoring higher rates for longer.

USDJPY remains firmer as the Japanese policymakers defend the Bank of Japan’s (BoJ) easy-money policy whereas AUDUSD and NZDUSD fail to print any major moves. Further, USDCAD drops and the crude oil rebounds. However, Gold price prints the first daily loss, so far, in 10 days.

BTCUSD appears lackluster while making rounds to the highest level on record whereas the ETHUSD eases from the highest level since December 2021.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s rebound from a two-week low to $83.00 by the press time.
  • Gold price snaps nine-day winning streak to print mild losses near $2,175 as we write.
  • USD Index hovers around 102.80-85 while testing the previous two-day recovery.
  • Wall Street closed mixed while the Asia-Pacific stocks edged lower. Further, the shares in Europe and the UK remain slightly positive during the initial hour.
  • BTCUSD and ETHUSD both retreat from the latest peaks to around $72,000 and $4,020 while flirting with multi-year highs.
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US Dollar rebounds, Gold eases ahead of US inflation data…

Given the market’s pre-data consolidation, the US Dollar Index (DXY), a gauge of the US Dollar versus the six major currencies, edges higher while defending the week-start recovery, as well as justifying Friday’s bullish Doji candlestick. It’s worth noting, however, that the sluggish moves of the US Treasury bond yields challenge the DXY upside around 102.80-85 of late.

Apart from the US Dollar’s rebound, fresh property sector woes in China also challenge the optimists, as well as the gold buyers as they step back from the 10-month-old resistance line surrounding $2,185-86. Recently, the global rating agency Moody’s withdrew China’s top property developer Vanke’s 'Baa3' rating and renewed fears about the nation’s housing market. On the same line could be the news suggesting Chinese regulators’ push for major banks to enhance financing support for leading to Vanke.

While the US Dollar’s rebound put a floor under the USDJPY, the comments from BoJ Governor Kazuo Ueda and Japan Finance Minister Shunichi Suzuki defended the central bank’s ultra-easy monetary policy and propelled the Yen pair.

Further, AUDUSD and NZDUSD fail to justify China-inflicted fears as domestic fundamentals appear slightly positive. Additionally, a recovery in Canada’s main export item, namely crude oil, allows USDCAD to pare recent gains despite a firmer US Dollar.

  • Strong buy: USDCAD, USDJPY
  • Strong sell: Crude Oil, US Dollar, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

US CPI is the key…

Moving on, the market’s peace with the Fed rate cuts to start in June 2024 might challenge the US Dollar’s latest rebound should today’s US CPI and Core CPI figures appear either mixed or softer. That said, the headline CPI is expected to remain unchanged at 3.1% YoY but may improve on MoM to 0.4% from 0.3%. Further, the CPI ex Food & Energy, also known as the Core CPI, bears the downbeat market forecasts of 0.3% MoM and 3.7% YoY respectively versus 0.4% and 3.9% in that order.

May the trading luck be with you!