The renewed strength of gold emerged in the last few hours, with the price of bullion extending the recent gains, despite the U.S. consumer price index jumping 0.4% in September (up from the 0.3% posted in the previous month).
The annual figure was released at +3.7%, slightly higher than analysts’ forecasts of (3.6%). The CPI data increased to 35% the chances of seeing one more rate hike from the Federal Reserve in December’s meeting, according to CME Fedwatch tool. Vice versa, rates are still expected to remain steady at 5.50% on the next reunion, in the calendar for the 1st of November. Those figures triggered a modest correction of the gold price, which declined from the two-week high of $1,883 an ounce to a low of $1,868, before starting to recover and absorbing around 70% of the correction, returning to $1,877 in today’s early trading.
From a technical standpoint, bullion has found an important support on the low reached earlier this month at $1,815. From those levels, investors started to buy gold again, with the demand that was also supported by the worsening of the geopolitical scenario with conflict in the middle east.
Gold is now just 1% below the first key resistance level that we can identify, in the region $1,890-1,900. For the next few trading sessions, a lateral consolidation between $1,860 and $1,900 appears to be the most likely scenario.
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