As the market considers potential US CPI and PPI results ahead of the Fed's Federal Open Market Committee (FOMC) meeting late Wednesday, the price of gold crept up to start Tuesday's session.
In the early going of this week, Treasury rates have been remarkably stable before the critical inflation data and monetary policy meeting. The 2s 10s curve inversion continues to be very bearish below -0.80%, but the bond market's commentary doesn't seem to have much of an impact on the equities markets.
The US 10-year real yield is currently trading above 1.5% at the same time that nominal yields have reached a plateau.
The market-priced inflation rate determined from Treasury inflation-protected securities (TIPS) for the same tenor is subtracted from the nominal yield to determine the actual yield.
If the CPI data released later today significantly deviates from forecasts, the real yield may experience volatility, which might cause the gold market to respond appropriately. The yellow metal was below US$ 1,850 in February when the 10-year real yield was at similar levels.
According to a Bloomberg survey of economists, the CPI will increase by 0.4% from the previous month to 0.1% in May. On the DailyFX calendar, additional information about the data is available.
Tuesday's US Dollar has been somewhat weaker, which has allowed crude oil to recover from a 5-week low. While the Brent contract is just over US$ 72 barrel, the WTI futures contract is close to that price.
When the People's Bank of China (PBOC) reduced the 7-day reverse repo rate from 2% to 1.9%, the markets received a small lift.
After receiving a boost from the Wall Street close, APAC stocks are largely marginally up. Futures indicate that the cash session will begin steadily.
View the calendar here to see all of today's data releases.
Forex News Trading: The MethodTrading Forex News: The Technique Daniel McCarthy Recommends
Forex News Trading: The Method
Take My Advice
Technical analysis of GC1 (GOLD FRONT FUTURES CONTRACT)
Gold is still flirting with the thought of breaking through the lower ascending trend line of the ascending trend channel it entered in November of last year.
If this trend line is broken cleanly, it may indicate that the bullish run may not continue.
Prior lows in the 1936–1945 range, which could serve as a support zone, are ahead of the 100-day Simple Moving Average (SMA), which is below the ascending trend line.
If these support levels are breached, a bearish run may develop, and the Double Bottom of 1811 and 1813 may become the next significant support zone.
If the price remains above the short-term 10- and 21-day SMAs and the immediate support levels hold, it may indicate that bullish momentum may continue to build.
The early May high of 2085 overcame the top of 2079 in March 2022 but fell short of the all-time high of 2089. A Triple Top, which is an extension of a Double Top formation, has been formed as a result of the inability to break fresh ground to the upside.
A probable resistance zone between 20280 and 2090 has been created as a result, but a sharp rise above those levels could signal developing bullishness. The top ascending trend channel line, which is currently close to 2185, may represent the next area of resistance.