GOLD: Gold Trades Sideways Ahead of US's May CPI
Jun-09 05:06
- Gold has done very little in the Asia trading day and is near to US$4,334 currently and relatively unchanged.
- Gold benefitted in 2025 from expectations of rate cuts and now as US yields head higher on oil related inflation concerns, gold seems to be losing its lustre for investors.
- From a technical perspective, gold prices are somewhere not seen for some time - below the 200-day EMA - for the first time since October 2023. This is widely viewed as confirmation that the multi-year bullish momentum has stalled, flipping the intermediate trend to bearish.
- Expectations in the US for the next move in rates to be higher is the key determinant here. This morning as uncertainty reigns in the Iran war, oil prices are rising which has of late fed through to higher US yields.
- The next major hurdle for the bond market and by default gold, is the May CPI out this week. Expectations are that following April's jump to +3.8%, May could see a further increase to +4.2%, adding to the hawkish outlook.
- One potential factor that may cap immediate, further declines in gold is that it is approaching oversold on the 14-day relative strength index. At 34 on the 14RSI, the sellers (bears) are in charge but could see momentum for lower moderate closer to oversold.
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