Gold Moves Lower As U.S. Inflation Rate Jumps To 3.7%
Gold is losing ground as traders react to U.S. inflation reports. Inflation Rate increased from 3.4% in August to 3.7% in September, compared to analyst forecast of 3.6%. Core Inflation Rate grew from 2.4% to 2.6%, exceeding the analyst estimate of 2.6%.
Inflation data showed that high energy prices boosted inflationary pressure. Most likely, Fed will be forced to raise rates to fight inflation.
According to FedWatch Tool, the probability of a rate hike at the next meeting in October has increased to 37.1%. Traders believe that Fed will take a pause despite rising inflation.
As usual, markets are forward-looking, so gold traders are focused on longer-term Fed policy outlook. At this point, the market expects that Fed will raise rates in December and January.
Interestingly, Treasury yields were mixed as bond traders reacted to inflation data. The yield of 2-year Treasuries climbed towards 4.81%, while the yield of 10-year Treasuries pulled back to 5.19%. I’d note that yields have pulled back from session highs, but this pullback did not provide any support to gold markets.
U.S. dollar rallied against a broad basket of currencies as forex traders bet on hawkish Fed. Strong dollar served as an additional bearish catalyst for gold markets.
Currently, gold is trying to settle below the $4100 level. In case this attempt is successful, gold will head towards the nearest support, which is located in the $4000 – $4020 range. A move below the $4000 level will open the way to the test of the $3950 level.
Silver Is Under Strong Pressure
Silver suffered a strong sell-off as gold/silver ratio rallied above the 73.50 level. In case gold/silver ratio settles above 73.50, it will head towards the 75.00 level.
Silver attempts to settle below the support level at $56.00 – $57.00. In case this attempt is successful, silver will head towards the next support at $51.00 – $52.00.
RSI is close to the oversold territory, but there is enough room to gain momentum in the near term. I’d note that a successful test of the support at $56.00 – $57.00 may lead to a sell-off as speculative traders will likely rush to close their long positions.
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See all Gold forecastsPlatinum Tests Support At $1600 – $1620
Platinum is losing ground amid strong sell-off in precious metals markets. Palladium markets are down by -2.6%, which is bearish for platinum.
From the technical point of view, platinum attempts to settle below the support at $1600 – $1620. If platinum manages to settle below the $1600 level, it will head towards the next support at $1520 – $1540.
On the upside, platinum needs to settle back above the $1620 level to have a chance to gain upside momentum in the near term. In this case, platinum will head towards the resistance level at $1700 – $1720.
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