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Gold: All eyes on US CPI and bank earnings

Fawad Razaqzada Fawad Razaqzada 13/07/2021
Gold: All eyes on US CPI and bank earnings Gold: All eyes on US CPI and bank earnings
Gold: All eyes on US CPI and bank earnings Fawad Razaqzada
After yesterday’s record high for the S&P, today it looks like it may be the Nasdaq’s turn to potentially lead the markets higher to fresh unchartered territories – although a lot will depend on the outcome of upcoming bank earnings and US CPI, all due later. Nasdaq futures jumped earlier on the back of a report by AP that the EU has put work on plans for a “digital tax” levy on hold to concentrate on finalizing the historic tax decision endorsed by G20 nations over the weekend.  The S&P futures also held near Monday’s highs ahead of the publication of US CPI and earnings from the likes of JP Morgan, Goldman Sachs and PepsiCo. Also adding to the positive sentiment was crude prices which found renewed support from bullish comments from the International Energy Agency. The IEA warned that the oil markets will tighten "significantly" if the OPEC+ stalemate continues and the group ends up rolling over July quotas to August. The group added that the OECD crude oil stocks are now well below historical averages. Meanwhile in FX, the dollar was moving sideways as you would expect given the importance of CPI due at 13:30 BST.

 
US inflation report up next

Given that the Fed is showing concerns over rising prices, inflation data over the coming months will be important as they could impact the timing of the Fed’s tapering of its bond purchases programme.

Analyst expectations are centred around 4.9% on the headline CPI, which would be a touch weaker than 5.0% from the previous month. In terms of core CPI, they expect a 4.0% reading – if correct this, would be up from 3.8% previously and the highest reading since 1991. On a month-on-month basis, CPI is seen rising 0.5% and 0.4% for the core print.

Expect the dollar and buck-denominated metals to move sharply on the back of today’s CPI data. If CPI is hotter than expected, it could revive taper talks again, sending the USD/JPY etc higher and potentially halting the Wall Street rally. But in recent times, investors have been shrugging off signs of inflationary pressures as so far, much of the rise in prices have been concentrated in categories impacted by the effects of supply chain bottlenecks and economic reopening.

Therefore, if it is again the same drivers, this wouldn’t worry the Fed too much as the central bank has repeatedly indicated it is happy to allow this type of an overshoot in prices.
 
Watch gold

Gold prices have been able to hold their own relatively well in the past few weeks as yields dipped and dollar rally slowed. However, it hasn’t been able to reclaim $1810 resistance yet. A closing break above this level is needed to tip the balance back in the bulls’ favour. If so, a quick rise to the next area of trouble around $1850 could be next:

GoldSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Carl Capolingua
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Carl Capolingua
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Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

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Mahmoud Alkudsi
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Mahmoud is a market analyst, with over a decade of experience in financial markets. He follows main market movers and tracks their effect on the price chart. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and with his wide experience in providing educational and guidance materials to all levels of traders, he helps them in making informed trading decisions. Before joining ThinkMarkets, Mahmoud was head of market research departments in different reputed financial companies, where he provided market analysis for a variety of asset classes, including FX, equities, indices, and commodity futures. As an experienced market commentator, he was hosted by too many print and broadcast media, including not limited to Sky News Arabia, France 24, Alarabyia, Alsharq-Bloomberg, and CNBC Alarabyia to discuss key risk events their clear impact on the price action. Mahmoud holds a Master of Business Administration (MBA) from Cardiff Metropolitan University of Wales, UK, and speaks Arabic, English, and Spanish.

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Shawn Lee
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Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.

Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Lesego
Lesego Mthombothi
Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
Mahmoud Alkudsi
Mahmoud Alkudsi
Mahmoud is a market analyst with over a decade of experience in financial markets. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and has experience in providing guidance to all levels of traders.
Shawn
Shawn Lee
Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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