Coiling Ahead Of U.S. CPI, Recent Move Lower Only Deemed Technical Correction For Now

Gold coils ahead of the U.S. CPI release, with slightly lower U.S. Tsy yields and a move away from session bests in the BBDXY allowing spot to consolidate yesterday’s uptick from fresh multi-week lows, last dealing little changed at ~$1,945/oz.

• Technically, the latest pullback in gold appears to be a correction - for now - and the trend condition remains bullish. A resumption of gains would open $2,022.2/oz, the May 15 high, with the bull trigger located a little ahead of that level at $2,009.4/oz. Initial support is seen at the 50-day EMA ($1,938.4/oz), although that was pierced yesterday. A clear break of this average would undermine the bullish theme and expose $1,908.3/oz, the Oct 16 low.
• A quick reminder that the unwind of a chunk of the geopolitical risk premium attached to the Israel-Hamas conflict has factored into the recent pullback in bullion.
• As ever, the details of the U.S. CPI release will be key for gold, as well as wider global financial markets. Our full release preview of the U.S. CPI release can be found here.
• On a more micro level, Citi believe that “gold miner equity names hold good risk/reward into CPI. An inline or below-consensus (0.3%) core CPI would be bullish real yields, gold and equity beta. Miners/Gold have already given back some gains, pricing out some geopolitical premium. Call skew is no longer extremely bid, and positioning looks more balanced.”