Gold Analysis Ahead Of Inflation Reports (CPI and Core CPI)

12 Jan 2022

The global economic growth downgrade by the World Bank has forced investors to focus on the U.S. inflation report today.

Gold price is turning up as traders revert to profit-taking in response to a better market mood. As a result, the annualized CPI is expected to hit another 40-year high, arriving at 7% in December vs. 6.8% recorded previously.

In addition, core CPI is seen higher at 5.4% YoY in December vs. 4.9% previous. This suggests that warmer U.S. inflation will seal in a March Fed rate hike and push gold prices higher.

Today CPI is expected 0.4% m/m from 0.8% m/m and core CPI is expected unchanged at 0.5% m/m.

Technically, gold stuck between trendline resistance and trendline support, and strong resistance is identified at the $1830/1835 price zone. There are several times gold was unable to break above the $1830/1835 price zone.

If the U.S. cpi report drop, gold may break above the $1830 price zone, and the next target to the upside is the $1850 price zone.

We may see a downward correction from the $1850 price zone, as $1850 is the trendline resistance price zone from the current scenario.

On the other hand, if CPI prints are positive, gold still has chances to test trendline support zone nearly at $1800/1795 price zone. Breaking below $1795 will open the door for $1780 and finally $1750/1755 price zone.