Gold prices brace for the US CPI report

Gold Prices, Chart and Analysis

• All eyes on the US inflation levels of July
• Bearish signals on the gold daily price chart, key tech levels to consider

Markets are eagerly anticipating the forthcoming release of the US consumer price index for July this week. Recent reports have highlighted a significant drop in US inflation rates over the past two months, primarily attributed to falling energy prices and in used car prices in the United States. These factors led to a headline CPI at 3%, while the core CPI rate (excluding energy and food) retreated to 4.8%.

Investors expect an inflation resurgence in the July CPI report, due to the recent upswing in energy prices. Predictions suggest that July’s figures could see the headline CPI climb to 3.3%, while the core CPI rate fall to 4.7%. Consequently, any lower-than-expected data, particularly in terms of core inflation, supports the market view that the Fed might keep the US interest rate unchanged at the September meeting. This could potentially result in a decline in the US dollar price and an increase in the price of gold. Conversely, if the released data surpasses expectations, this increases the odds of the Fed raising interest rates. This, in turn, could lead to a higher US dollar price and lower gold prices.

It’s noteworthy that this report, along with the US job report and inflation report of August, holds significant influence over the decision-making process of the FOMC in the September meeting, as this data will help the committee members to decide their next step.

Gold Daily Price Chart

Chart source ADSS Platform

On July 20 the gold rallied to a multi-week high at $1878/oz then retreated as some traders took profits. Later, the price started a bearish momentum creating lower lows with lower highs then closed at the start of August below the 50-day simple moving average and failed to close above.

Currently, the price tests trading below 1933 therefore, a daily close below that level could encourage some traders to press towards 1911. However, the support level located at 1916 should be watched closely. On the other hand, a daily close above 1933 signals a weaker bearish sentiment and may entice some traders to rally the price towards 1960. Nonetheless, the resistance levels residing at the 50-day simple moving average and 1949 should be kept in focus.