GOLD TECHS: Bear Threat Remains Present

• Housing inflation (driven by the rental price index) is expected to increase on the back of December's reference rate hike at some point this spring. As the rental price index appears to only be updated in the second month of a respective quarter, May now seems like the only plausible month this rate hike can come into effect on inflation considering historical lags.
• For reference, the rental price index increased 0.3% M/M last May. For the yearly rate to increase, this month's uptick would have to be firmer than that - which appears plausible.
• CHF depreciation stalled in April, so assuming a similar 2-month lag it would have little impact on the June CPI data; while June is not a month in which the rental price inflation increase could intensify as per the quarterly index update.
• Therefore, Jordan's comments that inflation could potentially come in firmer in Q2 than expected by the SNB seem to be consistent with a slight uptick in headline in May. Some underlying slowdown in inflation might throw this off, however..

MNI, SECO

Swiss CPI is due for release at 7:30BST / 8:30CET. Headline inflation is expected to have remain steady on a Y/Y basis in May after April's pronounced uptick, with consensus standing at +1.4% Y/Y and +0.3% M/M (vs +1.4% and 0.3% in April, respectively). Core CPI is expected to have accelerated further, however - consensus stands at +1.3% Y/Y (vs +1.2% Apr).

• A headline print in line with consensus would bring in the Q2 average to date in line with the SNB forecast of 1.4% ahead of the SNB's policy decision on June 20th.
• SNB President Jordan mentioned "small" upside risks to that forecast in a recent speech, though. Of course, these upside risks could also materialize after the SNB meeting, as part of the June inflation print.
• Two categories appear to be in focus again in May: Imported inflation and housing inflation.
• Imported inflation was the upside driver behind April's uptick amid CHF depreciation which started at the beginning of February, implying broadly a 2-month lag. As the Franc depreciated further in March, we see no obvious reason why this uptick in imported inflation should reverse in May.

• RES 4: 120.28 High Mar 14 and the bull trigger
• RES 3: 119.55 High Mar 27
• RES 2: 119.00 High May 16 and a key near-term resistance
• RES 1: 117.57 50-day EMA
• PRICE: 117.20 @ Close Jun 3
• SUP 1: 116.08 Low May 29
• SUP 2: 115.76 Low Apr 25 and the bear trigger
• SUP 3: 115.70 Low Dec 8 ‘23 (cont)
• SUP 4: 114.74 1.236 proj of the Dec 27 - Feb 22 - Mar 14 price swing

BTP futures traded sharply lower last week and in the process cleared support at 116.94, the May 15 low. The move down strengthens a bearish threat and a continuation would open 115.76, the Apr 25 low and a bear trigger. Clearance of this level would highlight an important technical break. On the upside, initial resistance is at 117.57, the 50-day EMA. Firmer resistance is seen at 119.00, the May 16 high.