Bracing For “Extraordinarily Elevated” U.S. Headline CPI

Gold deals ~$3/oz higher to print $1,956/oz at writing, operating a shade below session highs and comfortably around the middle of Monday’s range despite an uptick in nominal U.S. Tsy yields and the USD (DXY), with the 10-Year Tsy yield earlier hitting fresh multi-year highs at 2.83%. A note that this comes as U.S. Mar CPI is due to cross at 1230 GMT, where White House officials have already flagged the possibility for the headline CPI reading to be “extraordinarily elevated”, owing to higher energy prices in March.

• To recap Monday’s price action, the precious metal closed ~$6/oz firmer amidst a broad downtick in U.S. real yields to record a fourth straight day of gains, backing away from best levels at $1,969.6/oz in the NY session after successive Fedspeak from the Fed’s Waller, Bowman, Bostic, and Evans at two separate events.
• Focusing on the latter, comments from Chicago Fed President Evans (‘23 voter) facilitated a limited move in gold to around session lows after he said that he would not oppose the Fed hiking rates to 2.25% or 2.5% by the end of ‘22, representing a slightly more hawkish tilt to his comments last week, supporting the same by early ‘23 instead.
• Up next, Fed Governor Brainard will speak at a WSJ event later on Tuesday (1610 GMT).
• Looking to technical levels, bullion’s Monday highs took out initial resistance at $1,966.1/oz (Mar 24 high), exposing further resistance at $2,009.2/oz (Mar 10 high). Support is seen around ~$1,911.3/oz (50-Day EMA), a short distance away from the bear trigger at $1,890.2/oz (Mar 29 low).