Gold Retreats As CPI Exceeds Analyst Estimates
Gold is losing ground as traders focus on inflation data from the U.S. Inflation rate increased by +0.4% month-over-month in October, compared to analyst consensus of +0.3%. Core Inflation Rate grew by +0.3%, exceeding the analyst forecast of +0.2%.
Fed policy outlook changed as traders reacted to CPI report. According to FedWatch Tool, the probability of a 25 bps rate hike in December increased to 88.2%. Interestingly, there is also an 11.8% probability of a 50 bps rate hike. At this point, the market does not believe that Fed has any chance to leave rates unchanged.
Inflation data triggered a strong sell-off in U.S. bond markets. The yield of 2-year Treasuries climbed towards the 4.75% level, while the yield of 10-year Treasuries settled above the psychologically important 5.00% level. The strong rally in Treasury yields put material pressure on gold markets.
U.S. dollar rallied against a broad basket of currencies as forex traders focused on dynamics of Treasury yields and evaluated changes in Fed policy outlook. Strong dollar served as an additional bearish catalyst for gold markets.
Currently, gold is trying to settle below the support level at $4000 – $4020. In case gold manages to settle below the $4000 level, it will head towards the next support, which is located in the $3890 – $3910 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
Silver Dives As Traders Bet On Hawkish Fed
Silver suffered a sell-off as gold/silver ratio climbed back above the 78.00 level. In case gold/silver ratio stays above 78.00, it will head towards the 80.00 level, which will be bearish for silver. A move above 80.00 may put significant pressure on silver markets.
If silver pulls back below the $51.00 level, it will head towards the psychologically important $50.00 level. A move below $50.00 will open the way to the test of the support at $47.00 – $48.00.
On the upside, silver needs to climb above the $54.00 level to have a chance to gain upside momentum in the near term. In this case, silver will head towards the $55.00 level. A successful test of the $55.00 level will push silver towards the resistance at $56.00 – $57.00.
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See all Gold forecastsPlatinum Pulls Back Amid Falling Demand For Precious Metals
Platinum moved lower amid broad pullback in precious metals markets. Palladium markets were down by -1.8%, which was bearish for platinum.
In case platinum manages to settle below the $1500 level, it will head towards the nearest support, which is located in the $1440 – $1460 range. A move below the $1440 level will push platinum towards recent lows near the $1380 level.
On the upside, platinum needs to settle above the resistance at $1520 – $1540 to gain upside momentum in the near term. In this case, platinum will head towards the resistance level at $1600 – $1620.
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