Gold Weekly Analysis: It's all about inflation this week
The US labor market report was one of the most important economic reports last week. IN DECEMBER, the US economy added only 199k jobs where the market forecast was 426K.
The unexpected and negative news about the employment data caused fears that the US economy slowed down. At the same time, rates came out saying that Unemployment and wage rates are better than expectations, but markets reacted to this information with poor liquidity.
The employment figures, in general, are not too negative, especially if we think that they come at the end of the year.
Even though December's numbers were alarming, we should note that this is because of the Corona epidemic, which the United States of America recorded a few months ago.
Gold Market Mover Data For The Week
Fed Chair Powell Testifies
CPI m/m
Core CPI m/m
10-y Bond Auction
PPI m/m
Core PPI m/m
Unemployment Claims
30-y Bond Auction
Core Retail Sales m/m
Retail Sales m/m
Industrial Production m/m
Prelim UoM Consumer Sentiment
Even with this data in mind, it would still be premature to say that job growth has stopped or slowed since December 2021.
If job growth continues at its current pace- which seems possible given how vital things seem recent- coverage for the first half of 2022 could quickly occur by late January or early February 2022.
The labor market index, or the number two indicator of importance to the US Federal Reserve, is expected to release its monthly report next Wednesday.
The inflation index will occupy the number one spot on this list because the US Federal Reserve has changed its monetary policy and tendency towards a more stringent approach.
Expectations are that CPI will drop in December at a monthly pace of 0.4% from 0.8%, while Core CPI is also expected to be unchanged at 0.5%.
This news could impact stock prices and the gold market as investors expect it would match or exceed expectations- making it an important event for financial markets this week.
The market is pricing in an opportunity of more than 80%, according to FedWatch's CME Group tool, with a rate hike in March and four rate hikes this year.
This has already been priced in the markets as of this writing. Still, expectations are now rising that US interest rates may increase by four times this year compared to three expectations (in The latest estimates from the US Federal Reserve). These higher numbers will support other movements within the markets.
If FED hints at four rate hikes this year in their monetary policy, GOld may not go up as we expected. Rate hiking mostly depends on inflation reports.
If the inflation rises as expected, the FED will think to hike their rates. As a result, gold will drop. But if we see another drop in inflation, FED may not hike four times their bank rates this year. So, keep in touch with inflation reports.
The markets will also monitor the latest updates of the Omicron variable and the extent of countries' response to confronting the spread, especially after recording record levels in the speed of space and rising cases of anxiety.
The US dollar index is trading at 95.90 this morning, with opening prices being higher by about 0.17% since last week's close, as global stocks and gold prices continue to rise following a surge in returns seen over the previous week.
If the omicron concerns increase, there is no doubt that gold will test $1865 and the next $1900+.
Technical View
Gold is forming a triangle. The channel resistance is identified at the $1820 price zone from the present rates and channel support at the $1780 price zone.
So, as long as the market holds between channel support and channel resistance, the gold is not changing its long-term trends.
Gold was trying to break below the channel support zone several times, but it didn't happen. So gold pulls back after making a fake break out from the support trendline.
In the H4 chart, gold price testing 200 SMA, breaking above 200 SMA, our text target to the upside is $1815/125 price zone. Breaking above $1820/1825, we need inflation reports.
On the other hand, if the CPI report prints positive this week, gold may fall below trendline support and test the $1780 price zone. For breaking below $1780, we need another Hawkish statement from FED or Powell like last week and any hints that the FED will hike rates four times this year.
The unexpected and negative news about the employment data caused fears that the US economy slowed down. At the same time, rates came out saying that Unemployment and wage rates are better than expectations, but markets reacted to this information with poor liquidity.
The employment figures, in general, are not too negative, especially if we think that they come at the end of the year.
Even though December's numbers were alarming, we should note that this is because of the Corona epidemic, which the United States of America recorded a few months ago.
Gold Market Mover Data For The Week
Fed Chair Powell Testifies
CPI m/m
Core CPI m/m
10-y Bond Auction
PPI m/m
Core PPI m/m
Unemployment Claims
30-y Bond Auction
Core Retail Sales m/m
Retail Sales m/m
Industrial Production m/m
Prelim UoM Consumer Sentiment
Even with this data in mind, it would still be premature to say that job growth has stopped or slowed since December 2021.
If job growth continues at its current pace- which seems possible given how vital things seem recent- coverage for the first half of 2022 could quickly occur by late January or early February 2022.
The labor market index, or the number two indicator of importance to the US Federal Reserve, is expected to release its monthly report next Wednesday.
The inflation index will occupy the number one spot on this list because the US Federal Reserve has changed its monetary policy and tendency towards a more stringent approach.
Expectations are that CPI will drop in December at a monthly pace of 0.4% from 0.8%, while Core CPI is also expected to be unchanged at 0.5%.
This news could impact stock prices and the gold market as investors expect it would match or exceed expectations- making it an important event for financial markets this week.
The market is pricing in an opportunity of more than 80%, according to FedWatch's CME Group tool, with a rate hike in March and four rate hikes this year.
This has already been priced in the markets as of this writing. Still, expectations are now rising that US interest rates may increase by four times this year compared to three expectations (in The latest estimates from the US Federal Reserve). These higher numbers will support other movements within the markets.
If FED hints at four rate hikes this year in their monetary policy, GOld may not go up as we expected. Rate hiking mostly depends on inflation reports.
If the inflation rises as expected, the FED will think to hike their rates. As a result, gold will drop. But if we see another drop in inflation, FED may not hike four times their bank rates this year. So, keep in touch with inflation reports.
The markets will also monitor the latest updates of the Omicron variable and the extent of countries' response to confronting the spread, especially after recording record levels in the speed of space and rising cases of anxiety.
The US dollar index is trading at 95.90 this morning, with opening prices being higher by about 0.17% since last week's close, as global stocks and gold prices continue to rise following a surge in returns seen over the previous week.
If the omicron concerns increase, there is no doubt that gold will test $1865 and the next $1900+.
Technical View
Gold is forming a triangle. The channel resistance is identified at the $1820 price zone from the present rates and channel support at the $1780 price zone.
So, as long as the market holds between channel support and channel resistance, the gold is not changing its long-term trends.
Gold was trying to break below the channel support zone several times, but it didn't happen. So gold pulls back after making a fake break out from the support trendline.
In the H4 chart, gold price testing 200 SMA, breaking above 200 SMA, our text target to the upside is $1815/125 price zone. Breaking above $1820/1825, we need inflation reports.
On the other hand, if the CPI report prints positive this week, gold may fall below trendline support and test the $1780 price zone. For breaking below $1780, we need another Hawkish statement from FED or Powell like last week and any hints that the FED will hike rates four times this year.
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