US CPI Preview: Will inflation reach 8%?
The US will release CPI data for February on Thursday. Expectations are once again for a high reading. This month economists are looking for a 7.9% YoY reading vs a 7.5% YoY print in January. The Core CPI print, which excludes the volatile for and energy components, is expected to be 6.4% YoY vs a reading of 6% YoY in January. Much of the world had been seeing inflation rise for the last year due to supply constraint issues and rising wages. However, now they are also seeing a rise in inflation due to higher commodity prices because of the Russia/Ukraine conflict. This increase in prices will, most likely, eventually be passed through to consumers. It’s important to note that the price of Crude oil for February traded from 88.15 on February 1st and closed the month at only 95.72. Therefore, the run up in oil prices since March 1st to 127.50 will not be included in the CPI print.
Higher US inflation means a stronger US Dollar. (See “The US Dollar Index (DXY): How much higher can it go?”) In addition, higher inflation also means traders will be searching for somewhere to park their money as the Fed raises rates and risk moves lower. That place is usually precious metals, especially Gold.
Gold (XAU/USD) had been trading in as symmetrical triangle since making all-time highs in August 2020. After making a double bottom in the summer of 2021 near 1678.88, the precious metal began moving higher and broke above the top trendline of the triangle on February 11th, the day the US announced that Russia could invade Ukraine at any time. In late February, Gold broke through the neckline of the double bottom and was off to the races. The target for double bottom is near 2153, however first the pair must get through the all-time highs of 2075. However, notice that the RSI on the daily timeframe is in overbought conditions, an indication that Gold may be ready for a pullback.
Source: Tradingview, Stone X
Trade Gold now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, the latest 4-hour bar has had quite a range! , trading from a low of 2013 to a high of 2069.98. First resistance is at the all-time highs of 2075.11. Above there, gold can move to the double bottom target at 2153 and then the 127.2% Fibonacci extension from the highs of August 2020 to the double bottom lows in the summer of 2021, near 2183.42. Horizontal support sits at 2001.71, then 1950.27. If Gold falls below there, if can drop quickly to the neckline of the double bottom near 1916.62.
Source: Tradingview, Stone X
February’s CPI print is expected to be strong. The risk is that it comes in weaker. If the number is soft, we could see Gold move lower in a hurry.
Learn more about metals trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024