The price of Gold consolidates while awaiting US inflation data.

• Gold price oscillates within a tight range as attention focuses on US inflation data.
• A persistent inflation report could raise hawkish expectations from the Fed.
• Several Fed policymakers are scheduled to speak today.

The price of Gold (XAU/USD) is struggling to prolong its recovery, as investors remain anxious awaiting US inflation data for October, due at 13:30 GMT. The precious metal is consolidating, and investors are expected to wait until after the release before taking new positions as inflation data will provide them with greater clarity on the outlook for the Federal Reserve’s (Fed) monetary policy.

Economists foresee a sustained growth rate in the core Consumer Price Index (CPI), while general inflation will moderate. Reporting persistent inflation in the US would raise expectations of further tightening of monetary policy by the Federal Reserve. The Fed has committed to reducing inflation to 2% on schedule and will not hesitate to raise rates further if it believes inflation has taken hold.

Daily Market Summary: The price of Gold is trading aimlessly

• The price of Gold rebounds and approaches $1,945, but finds it difficult to extend the rise, as investors remain cautious awaiting US inflation data for October.
• The price of the yellow metal is in a tight range as investors are expected to build positions after the release of US consumer inflation figures, which will guide them on the Fed’s likely next action. on interest rates at its monetary policy meeting in December.
• The extent to which inflation persists in the US would provide some clarity on whether Fed policymakers will advocate for raising interest rates further.
• The monthly headline CPI is expected to have slowed to a rise of 0.1% in October, from 0.4% in September. In the same period, core inflation would grow at a constant rate of 0.3%.
• On an annual basis, headline inflation is expected to have increased at a slower pace of 3.3%, down from 3.7% in September. The core CPI would increase at a constant rate of 4.1%.
• A negative US inflation report could revive expectations of a further interest rate hike by the Fed at its December policy meeting or in early 2024.
• Higher inflation in the US would indicate that progress has slowed in reducing inflation to the Fed’s 2% target, prompting the need to raise interest rates further.
• According to the CME Group’s Fedwatch tool, traders see a 15% chance that the Fed will raise interest rates by 25 basis points (bps) at the December meeting and a 25% chance at the January policy meeting. 2024.
• The odds of further rate tightening have increased as Federal Reserve Chair Jerome Powell and his colleagues remain unsure whether current interest rates are adequate to reduce inflation to 2%.
• Jerome Powell warned that a failure to control inflation by the Fed would be a big mistake. Therefore, the central bank will not hesitate to tighten monetary policy further if necessary.
• Aside from the US inflation data, speeches by Fed policymakers Philip Jefferson, Michael Barr and Austan Goolsbee will be of utmost importance.
• The US Dollar Index DXY has consolidated in a range of 105.40-106.00 over the three sessions leading up to the release of the US inflation report. The 10-year US Treasury yield is around 4.63%.
• This week, investors will also focus on monthly US retail sales data for October. According to the consensus, consumer spending is expected to have contracted 0.3%, compared to the 0.7% growth recorded in September.
• Meanwhile, without a significant escalation of tensions in the Middle East, the yellow metal’s appeal has diminished.

Technical Analysis: Gold price retraces to 38.2% Fibonacci

The price of Gold is in a narrow range awaiting the publication of US inflation data. The corrective move in the precious metal has extended to near the 38.2% Fibonacci retracement (traced from the October 6 low of $1,810.50 to the October 27 high of $2,009.50) around $1,933. $.80.

The short-term outlook for Gold has turned bearish as it is trading below the 20-day exponential moving average (EMA), while the 50 EMA near $1,938 continues to offer support.