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Gold Price Running Into Resistance Ahead of US Inflation Data

Gold Price Running Into Resistance Ahead of US Inflation Data

Nick Cawley, Senior Strategist

Gold Price (XAU/USD), Chart, and Analysis

  • US inflation is expected to tick higher.
  • Gold fails to break an area of old resistance.

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The latest US inflation report, released at 13:30 GMT, is expected to show that price pressures are continuing to increase as supply chain issues and rising energy prices keep consumer prices at elevated levels. Core inflation y-o-y is seen rising to 4.3% in October from 4.0% in September while headline inflation is seen hitting a multi-decade high of 5.8% y-o-y compared to a prior month’s reading of 5.4%. As we head towards the release, the US dollar basket (DXY) is tending slightly higher at 94.22, while the yield on the benchmark 10-year US Treasury is 3 basis points higher at 1.48%.

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The recent gold rally has pushed the precious metal back into the middle of the multi-week bullish channel, aided by six higher lows in a row, discarding the Sunday candle. Gold is now nearing a zone of prior resistance between a set of prior highs and the 38.2% Fibonacci retracement level at $1,837/oz. This zone was rejected yesterday and may likely prove difficult to overcome in the near future unless today’s inflation reading misses expectations by a margin. Initial support is seen at around $1,813/oz.

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Gold (XAU/USD) Daily Price November 10, 2021

Retail trader data show 61.69% of traders are net-long with the ratio of traders long to short at 1.61 to 1. The number of traders net-long is 2.10% lower than yesterday and 12.40% lower from last week, while the number of traders net-short is 9.28% higher than yesterday and 39.67% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current

Gold price trend may soon reverse higher despite the fact traders remain net-long.

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What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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