Gold market analysis

Gold prices are expected to rebound intraday. 13/8 10:06 am Finalized

Yesterday, the US Department of Labor released the July CPI. The overall year-on-year increase remained at 2.7%, while the core CPI's year-on-year increase expanded from 2.9% to 3.1%. One of the reasons was that energy item prices dropped by 1.6% year-on-year. As for the monthly performance, the overall CPI increase slowed from 0.3% to 0.2%, with energy prices falling by 1.1% month-on-month. The core CPI, on the other hand, expanded from 0.2% to 0.3%. 

Investors interpreted the data in their own ways. US stock investors believed that the data increased the chances of a rate cut in September, and the three major US stock indexes opened higher. Currency traders also focused on the overall CPI performance. As the increase was lower than expected, non-US currencies rose sharply. The USD/JPY pair dropped sharply from the intraday high of 148.52 to 147.86. The EUR/USD pair also rose to 1.1668, and the GBP/USD pair rose to 1.3510. However, the US 10-year bond yield plunged to 4.235% and then rebounded to 4.328%, the highest since August 5. 

US inflation eases, putting pressure on gold prices 

Moreover, the easing of inflation has weakened gold's anti-inflationary role, putting pressure on the gold price. It has repeatedly challenged the $3,358 level but failed each time, instead frequently falling below $3,340, with the lowest point reaching $3,331. This raises concerns that even if the Federal Reserve does cut interest rates in September, the gold price may not benefit. From an hourly chart perspective, after the spot gold price broke through $3,360 on Monday of this week, it has generally moved sideways, but the trend has been extremely volatile, reflecting a fierce battle between bulls and bears. 

3380 is the biggest resistance for the current market. 

For the time being, it is expected that the gold price will fluctuate above $3,340 within the day. This morning, the gold price has broken through the downtrend line on the hourly chart, and it is an effective breakthrough. The measured upward target is approximately $3,378, which is close to the 61.8% retracement level of the largest decline since last Thursday at $3,379. However, the $3,360 level is exactly the 38.2% retracement level, and the gold price will encounter double resistance when it rebounds to this level. If it fails to break through and regain momentum, it indicates a weak trend in the gold price. Therefore, it is expected that the gold price will fluctuate between $3,340 and $3,360 within the day. The maximum resistance for an upward breakthrough is $3,380. If it breaks below the extended support of the ascending trend line at $3,344, the measured downward target is $3,317. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu