Sharp Pullback After US CPI Data

Gold is little changed in the Asia-Pac session, after closing 1.1% lower at $2158.34 following Tuesday’s release of hotter-than-expected US CPI data. Bullion has now shed ~$40/oz off the all-time high posted last Friday.

• USD strength and a return higher for US yields drove price action. US Treasury yields finished 5-6bps higher across benchmarks, with projected rate cut pricing receding as the CPI data was deemed unlikely to provide the FOMC with confidence that inflation will return to 2% in the near term.
• CPI m/m (0.4% vs. 0.4% est), y/y (3.2% vs. 3.1% est); CPI Ex Food and Energy m/m (0.4% vs. 0.3% est) y/y (3.8% vs. 3.7% est). Meanwhile, Real Avg Hourly Earning y/y (1.1% vs. prior 1.3% (rev)).
• According to MNI’s technicals team, a further pullback would encounter first strong support at $2145.40 - the 23.6% retracement for the Feb - Mar up leg. Initial resistance is at $2195.2, the March 8 high.