Gold experienced a gap-up opening due to the impact of the Israel-Palestine conflict, rising for three consecutive working days this week. However, yesterday (October 12th), gold prices fell following the unexpected influence of the US September CPI data and closed at $1868.44.
Last night, the US Department of Labor released the Consumer Price Index (CPI) for September, showing rapid growth for the second consecutive month, primarily driven by surging energy prices. The pace of core CPI growth slightly slowed down, but housing costs remained the main driving factor.
The data revealed that US CPI grew by 3.7% year-on-year in September, slightly higher than the expected 3.6%, but unchanged from the previous reading. The core CPI, excluding food and energy costs, increased by 4.1%, which was in line with expectations and lower than the previous reading of 4.3%, marking the slowest pace in nearly two years.
On a monthly basis, the CPI increased by 0.40% in September, surpassing the expectation of 0.30% but lower than the previous reading of 0.60%. The core CPI rose by 0.30% on a monthly basis, in line with expectations and the previous reading.
Although the cooling of core CPI may somewhat alleviate pressure on the Federal Reserve, the continued strength in energy prices makes it difficult to curb inflation. Market expectations suggest that the Fed may need to maintain high interest rates for a longer period.
However, recent remarks by Bowman leaned slightly dovish, causing the market's expectations for rate hikes this year to wane. On Tuesday (October 11th), during the IMF Annual Meeting, Bowman stated that interest rates might need to rise further and remain at a higher level for a longer time than previously anticipated to bring inflation down to the Fed's 2% target. This statement was more moderate compared to her previous remarks, where she believed multiple rate hikes might be necessary to suppress price pressures.
The recent escalation in the Israel-Palestine conflict has increased demand for safe-haven assets like gold, but the slight pullback in gold prices was influenced by the better-than-expected US CPI data. If Lebanon or Iran, among other countries, become involved, and if a new front is opened in the conflict, it could further escalate the situation and potentially push gold prices higher. However, if the situation can be kept under control within a certain range, gold may decline, continuing its previous pattern of volatile downward movement.
Technical Analysis
Although gold rebounded slightly due to geopolitical risks, it is still trading below the 200-day MA, indicating the continuation of a medium-to-long-term downtrend. In the short term, although the MACD shows a bullish crossover signal, the histogram remains negative. The RSI (14) is at 50, suggesting a potential minor fluctuation to the upside, with support levels at $1850 and $1859, and resistance at $1885 and $1900.
Source：Mitrade Webtrader
