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Gold Price Forecast XAU/USD – Early Strength Suggests Traders are Betting on Cooler PPI Numbers

By:
James Hyerczyk
Updated: Dec 9, 2022, 15:29 UTC

Gold could breakout to the upside if the PPI and Core PPI figures come in cooler-than-expected.

Comex Gold

In this article:

Gold futures are edging higher on Friday shortly before the release of key U.S. producer inflation data that could influence policy at next week’s Federal Reserve meeting. The catalysts behind the early price action are a slight dip in the U.S. Dollar and a weaker U.S. dollar.

At 12:22 GMT, February Comex gold futures are trading $1813.20, up $11.70 or +0.65%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $166.47, up $0.14 or +0.08%.

Treasury yields are trading flat-to-lower Friday as investors await the release of November’s producer price index (PPI), which will provide fresh insights into whether inflation is easing.

Today at 13:30 GMT, fresh PPI data, which reflects wholesale inflation, will show whether the rate hikes implemented so far this year have been effective in pushing back against rising prices. The data could also provide hints about future rate policy to investors.

Traders are looking for the report to show that monthly PPI and monthly Core PPI rose 0.2% in November. A weaker-than-expected reading could trigger a breakout to the upside.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade though $1822.90 will signal a resumption of the uptrend. A move under $1752.90 will change the main trend to down.

The minor trend is also up. A trade through $1778.10 will change the minor trend to down. This will also shift momentum to the downside.

Gold is currently trading on the strong side of a long-term Fibonacci level at $1804.30, making it support. Additional support is a pair of 50% levels at $1778.20 and $1771.50. On the upside, the next resistance is $1861.30.

Daily Swing Chart Technical Forecast

Trader reaction to the Fibonacci level at $1804.30 is likely to determine the direction of the February Comex gold futures contract on Friday.

Bullish Scenario

A sustained move over $1804.30 will indicate the presence of buyers. The first upside target is $1822.90. Taking out this level could extend the rally into the Aug. 10 main top at $1836.70. This is a potential trigger point for an acceleration into the long-term Fibonacci level at $1861.30.

Bearish Scenario

A sustained move under $1804.30 will signal the presence of sellers. This could trigger a sharp break into the support cluster at $1778.20 to $1778.10. Additional support comes in at $1771.50. This is a potential trigger point for an acceleration into the main bottom at $1752.90.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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