Consolidating Ahead Of U.S. CPI

Gold deals $1/oz weaker to print ~$1,723/oz, extending a pullback from Monday’s best levels at writing.

• To recap, gold closed ~$8 firmer on Monday after briefly touching its highest level for September (at $1,735.1/oz), recording a two-session streak of higher daily closes ahead of the U.S. CPI reading due today.
• On the latter, the NY Fed Aug survey of consumer expectations pointed to a decline in inflation expectations across the board for another month (1-Year expectations dipped to 5.7% from 6.2% in June), raising hope from some quarters that Tuesday’s CPI reading will point to a peak in inflation.
• Sep FOMC dated OIS continue to price in just under 75bp of tightening at that meeting, with a significant surprise to today’s CPI reading likely required to shift the needle, given Fedspeak voicing support for a 75bp move prior to the Fed’s media blackout period.
• From a technical perspective, gold’s recent gains are considered corrective, following the recent breach of support at $1,727.8 (Aug 22 low). Support is seen at $1,681.0 (21 Jul low and bear trigger), while initial resistance is located at ~$1,754.7 (50-Day EMA).