Gold price rebounds ahead of monthly low with US CPI on tap

Gold Price Outlook

The price of gold may attempt to retrace the decline following the better-than-expected US Non-Farm Payrolls (NFP) report as it holds within Friday’s range, but the update to the US Consumer Price Index (CPI) may drag on the precious metal if the figures reveal persistent inflation.

Gold price rebounds ahead of monthly low with US CPI on tap

The price of gold consolidates after clearing the 2020 high ($2075) during the first full week of May, and bullion may retrace the decline from the yearly high ($2082) as it seems to be tracking the positive slope in the 50-Day SMA ($1957).

Join David Song for the Weekly Fundamental Market Outlook webinar. Register Here

FOREX.com Economic Calendar

Looking ahead, the US CPI may influence the price of gold as the headline reading is expected to hold steady at 5.0% per annum in April, while the core rate of inflation is seen narrowing to 5.5% from 5.6% per annum during the same period.

Little signs of disinflation may curb the recent rebound in the price of gold as it raises the Federal Reserve’s scope to pursue a more restrictive policy, and it remains to be seen if the central bank will take further steps to combat inflation as Chairman Jerome Powell and Co. ‘are prepared to do more if greater monetary policy restraint is warranted.’

Source: Cleveland Fed

According to the Cleveland Fed’s Inflation Nowcasting model, the US CPI is projected to print at 5.2% while the core rate is expected to cross the wires at 5.6%, and a stronger-than-expected reading for consumer prices may generate a bearish reaction in gold as it undermines speculation for a looming change in regime.

With that said, the price of gold may face headwinds should the update to the CPI spark bets for higher US interest rates, but bullion may attempt to retrace the decline from the yearly high ($2082) as it seems to be tracking the positive slope in the 50-Day SMA ($1957).

Gold Price Chart – XAU/USD Daily

Chart Prepared by David Song, Strategist; Gold Price on TradingView

The price of gold appears to be bouncing back ahead of the monthly low ($1977) as it curbs the recent series of lower highs and lows, and the exchange rate may track the positive slope in the 50-Day SMA ($1957) as it trades back above the $2018 (61.8% Fibonacci extension) to $2020 (78.6% Fibonacci extension) region.
Failure to extends the recent series of lower highs and lows may push the price of gold back towards $2075 (78.6% Fibonacci extension), with a move above the monthly high ($2082) bringing the $2150 (100% Fibonacci extension) back on the radar.
However, lack of momentum to hold above the $2018 (61.8% Fibonacci extension) to $2020 (78.6% Fibonacci extension) region may push the price of gold towards the monthly low ($1977), with a break/close below the $1973 (78.6% Fibonacci retracement) to $1977 (50% Fibonacci extension) area raising the scope for a test of the 50-Day SMA ($1957).

Additional Resources:

USD/CAD reverses ahead of April high with monthly open in focus

Oil price forecast: crude susceptible to oversold RSI

--- Written by David Song, Strategist

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.