Gold Price Forecast: XAUUSD to dive below $1,830 towards $1,790 on stubborn inflation – TDS
|US core prices have leaped by 0.6% MoM in April, substantially higher than expected. After dropping to the low $1,840s shortly after the data release, gold popped higher into the $1,850s. Despite today's bounce, stubborn inflation poses downside risks for the yellow metal, strategists at TD Securities report.
Still plenty of long exposure in gold
“The US CPI came in at a higher-than-expected 0.3% MoM, with core also up a higher-than-expected 0.6%. While inflation is down to 8.3% and 6.2% y/y in April, it is higher than was anticipated and may suggest that inflation is more entrenched than the Fed is anticipating.”
“The fact that the CPI is driven by rents and services implies that price pressures are entrenched and may manifest in upward pressure on wages too. This likely means gold traders will expect the Fed to step up their hawkish signals.”
“Given that positioning is still tilted to the long end of exposure, continued higher-than-expected price prints could easily send gold below $1,830/oz in the not too distant future.”
“If XAU/USD dips below the $1,830s support levels, technicians could pull the yellow metal down toward the $1,790s fairly quickly.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.