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Gold prices could rise further if US PPI data disappoint

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Gold, XAU / USD, inflation, real profitability, producer prices – talk

  • Gold profit as CPI data suggest that inflation may have peaked
  • The U.S. Producer Price Index (PPI) could have an even greater impact on ingot prices
  • XAU rises above the January high, which may contribute to further growth

According to the latest Consumer Price Index (CPI) for April, gold prices have recovered after inflation in the United States cooled slightly. The CPI exceeded the wires by 8.3% year on year. This was higher than Bloomberg’s consensus estimate by 8.1%. However, it was slightly lower than the March figure of 8.5% y / y.

The reaction of the gold was probably due to the behavior of the treasury market. Real profitability – the main factor in the price of ingots, decreased after the CPI. Lower real yields benefit gold because it is an interest-free asset that lowers the opportunity value of gold. The 10-year inflation index fell by 15 basis points overnight, but remains in positive territory. Yellow metal may continue to grow if real profitability declines further.

Data on the US Producer Price Index (PPI) for April will be presented tonight. According to a Bloomberg poll, analysts see the CPI cooling to 0.5% year-on-month. This would have dropped from 1.4%, which means a fairly significant drawdown. This can help calm inflationary fears, as factory prices are sometimes seen as a major indicator of downstream inflation. Gold could go up if today’s data turns out to be below expectations.

Technical forecast XAU / USD

Gold prices are moving above the January high through Asia-Pacific trade, a level previously supported. Maintaining this level can cause further bullish energy to raise prices up. If so, the 20-day simple moving average (SMA) drop could end up. Meanwhile, MACD and RSI oscillators seem to be improving.

Daily chart XAU / USD

Xau diagram

The chart is created from TradingView

— Author: Thomas Westwater, DailyFX.com analyst

To contact Thomas, use the comments section below or @FxWestwater on Twitter

https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2022/05/12/Gold-Prices-May-Climb-Further-if-US-PPI-Data-Disappoints.html

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