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Gold Price Outlook Turns to Fedspeak After Consumer Inflation Expectations Jitter

Gold Price Outlook Turns to Fedspeak After Consumer Inflation Expectations Jitter

Daniel Dubrovsky, Strategist

Gold, XAU/USD, US Dollar, Treasuries, Fed, Inflation Expectations - Talking Points:

  • Gold prices gave up most gains on Monday during Wall Street trade
  • Fed inflation expectations survey unnerved markets, eyes on speeches
  • XAU/USD remains in a near-term uptrend, broader downtrend holds

Anti-fiat gold prices climbed over the past 24 hours, but the yellow metal lost most of its upside progress during the Wall Street trading session. XAU/USD initially capitalized on a falling US Dollar in the aftermath of last week’s disappointing non-farm payrolls report. But, risk aversion reversed this trend as the haven-linked Greenback regained some of its lost ground.

The deceleration in gold seemed to occur in the aftermath of the Federal Reserve’s inflation expectations survey. The report showed that price growth estimates for one year out were anchored at 3.36% in April versus 3.24% prior. That was the highest outcome since September 2013. Consumers also anticipate the price of gasoline, food and rent to climb 9.18%, 5.79% and 9.49% respectively.

The rise in inflation estimates seemed to push up Treasury yields, making relatively safer bonds more competitive compared to other parts of the market. That includes tech stocks, where perceptions of lofty valuations linger. These experienced some of the largest declines among equities during the North American session. The flight to safety brought up demand for the US Dollar, pressuring XAU/USD lower.

With that in mind, all eyes are on Fedspeak in the remaining 24 hours. Presidents of the New York, San Francisco, Atlanta and Philadelphia branches are due to speak. If they continue to downplay near-term rising CPI expectations, it could calm global equity markets, pressuring bond rates and the US Dollar. Such an outcome could end up being well for gold. Check out the DailyFX Economic Calendar for more Fed speak times.

Gold Technical Analysis

On the 4-hour chart below, gold remains in a near-term uptrend, defined by the bounce in late March. Having said that, falling resistance from 2020 is maintaining the broader downtrend. Negative RSI divergence does show that upside momentum is fading, which can at times precede a turn lower. This could consequentially place the focus on the 20-period Simple Moving Average.

XAU/USD 4-Hour Chart

Gold Price Outlook Turns to Fedspeak After Consumer Inflation Expectations Jitter

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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