Gold Bulls Have The Advantage, U.S. CPI Next

Gold Bulls Have The Advantage, U.S. CPI Next

What’s next? US CPI

With 25 basis point cut a lock, how significant is tonight US CPI report? Hugely significant. While the CPI outcome should not alter the Fed current thinking about a 25 bp cut, a more moderate than expected reading will increase the likelihood of an even more aggressive policy response.

But none the less it could be holding back the real “risk on” the party as investors are waiting to clear both the CPI data and day 2 of Chair Powell testimony.

Gold markets

Chair Powell testimony focused on the holy trinity for gold traders while hitting all the right chords stressing global growth and low inflation continue to cloud the US economic outlook.

Interesting trading dynamics this morning, while the above suggest Gold bulls have the advantage, we’re seeing some sizable offers hitting the markets at $1425 possibly from funds booking profits after they missed this level last week suggesting we could be running into some decent short term resistance.

Gold upswings have been very quick and sudden, and that alone has fast money accounts also booking profits quickly on the first sign that upward momentum is waning.

Demand for silver has picked up today as silver plays catch up to its bigger brother, Gold.

Oil markets

The very persuasive and weighty EIA oil inventory draw of 9.5 million barrels continues to dominate sentiment today.

Asian markets

Local equity markets are reveling in the best of both worlds this morning as local investors love nothing more than lower US interest rates and a weaker USD, except for Tokyo to the later.

On the currency markets, while we suggested: “Grab em while you can” in reference to regional high yielder on Monday, but this convincingly dovish pivot by the Fed should be supportive for both commodity and equity inflow linked currencies so the local traders should have a busy day handling buying orders across a broad spectrum of ASEAN currencies.

G-10

As expected, USD/JPY selling has been relentless this morning as we are now on the cusp of breaking through 108. Few have shown any serious inclination to stand in front of this one-directional move today so far.

Gold Bulls Have The Advantage, U.S. CPI Next

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