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GOLD: Recent Pullback Extends

GOLD
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Gold is 0.5% lower in today’s Asia-Pac session, after closing 1.0% lower at $2572.98 on Wednesday. This came as the US dollar posted further gains, despite the softer-than-expected US supercore CPI inflation data.

  • US Treasuries reversed course following in-line October CPI inflation data. The probability of a 25bp cut next month leapt to more than 80% from shy of 60% the previous session.
  • US curves twisted steeper, with the 2-year yield finishing down 6bps versus a 2bp rise for the 10-year.
  • Core CPI was exactly as expected at 0.35%, and basically unchanged from September (0.35%). However, supercore (core services ex housing) came in on the soft side at 0.31% vs 0.39% expected and 0.40% prior.
  • Fed Musalem said he supports further interest rate cuts if inflation keeps falling, but added the risks that it doesn't have risen as the labour market stays healthy.
  • Lower rates are typically positive for gold, which doesn’t pay interest.
  • According to MNI’s technicals team, the latest pullback in gold appears to be corrective, but the recent weakness has brought the yellow metal below the 50-day EMA, at $2,642.0, signalling scope for a deeper retracement towards $2,547.0 the Sep 18 low.
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Gold is 0.5% lower in today’s Asia-Pac session, after closing 1.0% lower at $2572.98 on Wednesday. This came as the US dollar posted further gains, despite the softer-than-expected US supercore CPI inflation data.

  • US Treasuries reversed course following in-line October CPI inflation data. The probability of a 25bp cut next month leapt to more than 80% from shy of 60% the previous session.
  • US curves twisted steeper, with the 2-year yield finishing down 6bps versus a 2bp rise for the 10-year.
  • Core CPI was exactly as expected at 0.35%, and basically unchanged from September (0.35%). However, supercore (core services ex housing) came in on the soft side at 0.31% vs 0.39% expected and 0.40% prior.
  • Fed Musalem said he supports further interest rate cuts if inflation keeps falling, but added the risks that it doesn't have risen as the labour market stays healthy.
  • Lower rates are typically positive for gold, which doesn’t pay interest.
  • According to MNI’s technicals team, the latest pullback in gold appears to be corrective, but the recent weakness has brought the yellow metal below the 50-day EMA, at $2,642.0, signalling scope for a deeper retracement towards $2,547.0 the Sep 18 low.