PPI weakens across the board, gold breaks through the 2050 mark and is expected to test 2100!
US Producer Price Index (PPI) across the board lower than expected, the swap market has digested more Fed rate cuts in 2024, and gold bulls are poised to take the 2050 mark.
Time:
2024-01-13 08:10
Huitong Finance APP News— United States Producer Price Index (PPI) across the board lower than expected, the swap market digested 2024 Federal Reserve More rate cuts, gold bulls poised to take the 2050 mark.
On Friday (January 12), newly released data showed that the December PPI month-on-month rate was -0.1%, expected 0.10%; the December PPI year-on-year rate was 1%, expected 1.30%. At the same time, the December core PPI month-on-month rate was 0%, expected 0.20%; the December core PPI year-on-year rate was 1.8%, expected 1.9%. After the data release, traders raised the Fed's 2024 rate cut expectations from 154 basis points to 160 basis points.
These figures contradict Thursday's Consumer Price Index (CPI) data, which showed a rise in overall inflation on Thursday. The PPI data released today is below almost all expectations and reveals a gap between what end consumers pay and what producers actually pay.
Market reaction:
Gold prices benefited from tensions in the Middle East and gained new momentum from the PPI. After the data release Spot gold rose sharply in the short term by nearly 5 US dollar , currently at $2052.91 per ounce.
COMEX most active gold futures contract Beijing time January 12, 21:30--21:31 within one minute of the trading volume instantly traded 2499 hands, the total value of the trading contract is $514 million.
Mixed US consumer inflation data fueled expectations that the Fed may delay a much-anticipated rate cut in March, dragging gold prices to a one-month low on Thursday. Gold prices then rebounded on the back of tensions in the Middle East.
Following weeks of attacks on ships in the Red Sea by Houthi rebels, disrupting global shipping, the US and UK launched air strikes against targets of the Houthi rebels in Yemen, targeting radar facilities, storage sites and missile launchers. On Thursday, Houthi rebel leader Abdul-Malik al-Houthi warned that any US attack on the Houthi rebels would be met with a response, and that future counterattacks would be even more intense. A Houthi rebel spokesman said on Friday that US and UK forces had launched 73 attacks on Yemen. The US-UK attacks killed five people. At the same time, it said that Yemen's response is imminent.
Technical Analysis #Gold Technical Analysis#
(Source: FXStreet)
From a technical perspective, the overnight rebound of the 50-day moving average and the subsequent rise, as well as the positive oscillation indicators on the daily chart, are favorable to bullish traders. Nevertheless, before preparing for further gains, it is prudent to wait for a sustained strengthening above the $2,040-2,042 supply area. Subsequently, gold prices may accelerate the momentum of last Friday's volatility high (around the $2,064 area) and eventually rise to the $2,077 area. Some follow-up buying will offset any near-term negative outlook and lay the groundwork for reclaiming the $2,100 integer level.
On the other hand, the $2,022 area now appears to protect against immediate downside below the multi-week low (around the $2,013 area) or the 50-day moving average tested on Thursday. A convincing break below the latter would be seen as a new trigger for bearish traders and would drag gold prices to the $2,000 psychological level. The downward trajectory could extend further to the December volatility low, around the $1,973 area, and then eventually fall to the $1,965-1,963 confluence, including the 100-day and 200-day moving averages.
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Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.