GOLD | Very sensitive to the upcoming CPI report

14 nov 2023

XAUUSD, NASDAQ 100 FORECAST
- Gold prices and Nasdaq 100 will be very sensitive to the upcoming US inflation report
- The US Bureau of Labor Statistics will release October consumer price index data on Tuesday
- Headline CPI is forecast to increase 0.1% month-on-month and 3.3% year-on-year. Meanwhile, the core index is expected to come in at 0.3% monthly and 4.1% annually

The US Bureau of Labor Statistics will release consumer price index figures on Tuesday morning. With the Federal Reserve so sensitive to incoming information and aware of the risk of rising inflation, the latest CPI report will carry more weight in the eyes of financial markets. This could mean more volatility in gold and Nasdaq 100 prices in the coming trading sessions.

In terms of estimates, headline CPI is forecast to rise 0.1% on a seasonally adjusted basis in October. This would push the annual rate to 3.3% from 3.7% previously. Meanwhile, the core gauge, which excludes food and energy, is forecast to rise 0.3% on the month, with the related 12-month index unchanged at 4.1%.

UPCOMING DATA
The Fed took a data-focused stance and noted it would “proceed carefully.” Despite this cautious approach, the organization has not completely closed the door on additional policy consolidation, with Chairman Powell indicating that officials are not confident that they have reached a sufficiently restrictive stance To bring inflation back to 2.0% and further progress in reducing price pressures is needed. Not guaranteed.

Taken together, Powell's comments suggest that the FOMC is not following a predetermined path and is prepared to respond appropriately to adverse developments that could hinder the implementation of its mandate. Against this backdrop, any deviation of the October CPI figure from consensus expectations could prompt policymakers to advocate another rate hike at one of the upcoming meetings of the Federal Reserve. Surname.

FOMC MEETING PROBABILITY
If interest rate expectations change to be more hawkish due to the hot CPI report, US interest rates will rise, boosting the US dollar. This, in turn, could put downward pressure on gold, Nasdaq 100. The opposite is also true; An unexpected surprise in last month's inflation data would support precious metals, tech stocks by capping yields and weakening the argument for higher prices for longer.

TECHNICAL ANALYSIS XAUUSD
Gold has reversed losses this month after failing to reach a key ceiling in the $2,010/$2,015 area. If the price turns bullish and consolidates decisively above this technical indicator, initial resistance will emerge at $1,980, followed by $2,010/$2,015.

On the other hand, if sellers reappear and reignite bearish pressure, the initial floor to watch would lie at $1,935. While gold could gain a foothold in this zone on the downside, a violation of the downside could send gold down to $1,920. Below this threshold, attention turns to $1,900.