Bullion In Holding Pattern Ahead Of US CPI Data

Gold is treading water ahead of the US April CPI data, which is expected to give guidance on the next Fed move. It is down 0.2% to $2031.43/oz, close to the intraday low of $2030.55, after rising 0.7% on Tuesday to $2034.53 on the back of lower US yields. The USD index is 0.1% lower ahead of the data.

• Resistance is at $2063, the May 4 high, but prices are still some way off this but a lower than expected US inflation print could see bullion rally towards this level as a Fed pause is priced in. If it is higher than projected then it increases the chance of more hikes and thus the risk of a recession, which could also be positive for gold.
• Bullion continues to benefit from safe-haven flows driven by the US debt-ceiling impasse, which didn’t find a resolution after talks on Tuesday. See Another Debt Ceiling Meeting On Friday.
• The focus of the day is the US April CPI data which is forecast to rise by 0.4% m/m with headline remaining at 5% y/y and core easing 0.1pp to 5.5%. Real average weekly earnings for April and the April budget statement are also released.