Gold prices (XAU/USD) faced renewed daily selling pressure throughout Wednesday's Asian trading session, following the commodity's resounding failure to break through and sustain above the psychological level of $4,100 the previous day.
Although gold is currently edging above the secondary psychological floor of $4,000 per troy ounce, its post-CPI recovery has been severely hampered by the resurgence of energy inflation expectations amid the outbreak of all-out war in the Middle East.
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✅ Macro Dynamics: June Deflation Surprise vs. Kevin Warsh's Steely Rhetoric
Transatlantic financial markets are currently caught in a very extreme quarterly transition daily data anomaly:
- 🔸US CPI Index Crash: The US Bureau of Labour Statistics reported a -0.4% plunge in June Consumer Price Index (CPI) data (the largest monthly decline since the pandemic in April 2020) due to falling domestic gasoline prices before the lockdown. Annually, the General CPI slowed to 3.5%, and the Core CPI fell sharply to 2.6%. This cooling data briefly dragged the US dollar to a four-week low as the market hastily cut its Fed rate hike projections.
- 🔸Kevin Warsh's Verbal Intervention in Congress: Gold's initial bullish reaction was quickly extinguished after Fed Chairman Kevin Warsh delivered his blistering first testimony before Congress. Warsh asserted that the Fed has zero tolerance for frozen inflation and publicly emphasised the resilience of the US economy's fundamentals. This statement confirmed that the Fed is prepared to overlook the June CPI slowdown in anticipation of new inflation threats.
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✅ XAU/USD Technical Analysis (Intraday)
Technically, the strong rejection above $4,100 confirms that gold's short-term bias remains entirely to the downside (downside continuation bias):
- 🔸Fade the Rally Pattern: The current macroeconomic fundamentals are tilted strongly in favour of XAU/USD sellers. Any attempt at a relief rally is projected to immediately encounter concentrated selling supply from institutional algorithms.
- 🔸PPI Data Verdict & Warsh Day 2: The focus of trading in the New York session tonight will be directly triggered by the release of the US Producer Price Index (PPI) data (7:30 PM WIB) and the second day of Kevin Warsh's congressional testimony. If tonight's producer price inflation (PPI) data is released heatedly due to energy cost transmission, gold is certain to plummet below $4,000 and head straight for the current year's low of $3,942-$3,943.
Although gold is currently edging above the secondary psychological floor of $4,000 per troy ounce, its post-CPI recovery has been severely hampered by the resurgence of energy inflation expectations amid the outbreak of all-out war in the Middle East.
--------------------------------------------------------------------------------------------------------------
✅ Macro Dynamics: June Deflation Surprise vs. Kevin Warsh's Steely Rhetoric
Transatlantic financial markets are currently caught in a very extreme quarterly transition daily data anomaly:
- 🔸US CPI Index Crash: The US Bureau of Labour Statistics reported a -0.4% plunge in June Consumer Price Index (CPI) data (the largest monthly decline since the pandemic in April 2020) due to falling domestic gasoline prices before the lockdown. Annually, the General CPI slowed to 3.5%, and the Core CPI fell sharply to 2.6%. This cooling data briefly dragged the US dollar to a four-week low as the market hastily cut its Fed rate hike projections.
- 🔸Kevin Warsh's Verbal Intervention in Congress: Gold's initial bullish reaction was quickly extinguished after Fed Chairman Kevin Warsh delivered his blistering first testimony before Congress. Warsh asserted that the Fed has zero tolerance for frozen inflation and publicly emphasised the resilience of the US economy's fundamentals. This statement confirmed that the Fed is prepared to overlook the June CPI slowdown in anticipation of new inflation threats.
--------------------------------------------------------------------------------------------------------------
✅ XAU/USD Technical Analysis (Intraday)
Technically, the strong rejection above $4,100 confirms that gold's short-term bias remains entirely to the downside (downside continuation bias):
- 🔸Fade the Rally Pattern: The current macroeconomic fundamentals are tilted strongly in favour of XAU/USD sellers. Any attempt at a relief rally is projected to immediately encounter concentrated selling supply from institutional algorithms.
- 🔸PPI Data Verdict & Warsh Day 2: The focus of trading in the New York session tonight will be directly triggered by the release of the US Producer Price Index (PPI) data (7:30 PM WIB) and the second day of Kevin Warsh's congressional testimony. If tonight's producer price inflation (PPI) data is released heatedly due to energy cost transmission, gold is certain to plummet below $4,000 and head straight for the current year's low of $3,942-$3,943.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.