Gold Shrugs Off Inflation Data

Gold Shrugs Off Inflation Data

Gold shrugs off inflation data this morning as the U.S. Consumer Price Index shows a 0.4% rise for October according to the U.S. Labor Department. Consensus forecasts were calling for a rise of 0.3% following September’s flat number. The October number marks the highest monthly increase since March.

The yellow metal had already advanced early Wednesday, rebounding from Tuesday’s three-month low, as remarks by U.S. President Donald Trump about the U.S.-China trade talks offered no fresh insights about a pending accord.

While Trump said the U.S. was “close” to a deal with China in a speech to the Economic Club of New York, but he also said he will increase tariffs on China if the first step of a broader agreement isn’t reached.

“If we don’t make a deal, we’re going to substantially raise those tariffs,” he said. “They’re going to be raised very substantially. And that’s going to be true for other countries that mistreat us, too, because we’ve been mistreated by so many countries.”

The yellow metal skyrocketed earlier this year as a safe haven against uncertainty over the standoff between the two superpowers.

December gold futures fell 0.2% Tuesday to settle at $1,453.70 an ounce on Comex, the lowest closing price for a most-active contract since Aug. 1. Bullion decreased 0.6% during the first two trading days of the week and is down 4% so far in November. This morning finds the December contract up at $1,464.20.

Gold is struggling to hold onto support at $1,450 an ounce and may seek to test levels about $40 lower than that, according to a technical analysis from DailyFX. “Limited support” may exist at $1,437.50 before the 200-day moving average at $1,408.50 and the 50% Fibonacci retracement level at $1,405.50. The 61.8% Fibonacci retracement level of $1,463.50, which gold broke through last week, “will now act as primary resistance to any rebound.”

Investors continue to keep a close eye on economic news for indications on whether the Federal Reserve will cut interest rates for a fourth consecutive time in December. Fed Chairman Jerome Powell will address the Joint Economic Committee of Congress on Wednesday in Washington. The CME FedWatch Tool showed just a 3.7% probability of another cut at the Federal Open Market Committee’s next meeting Dec. 11, while 96.3% predicted no change early Wednesday.

In other economic news, China will report retail sales and industrial production data Thursday, and U.S. retail sales data are due out Friday.

Silver dropped 0.7% Tuesday and declined 1.1% in the first two days of the week, outpacing gold’s losses. The most-active December contract settled at $16.69 an ounce on Comex, the lowest level in more than three months. Spot platinum also fell. Spot palladium rose Tuesday, but its decline Monday left it down for the first two days of the week.


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