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June 10th - The U.S. Labor Department reported on Wednesday that the Consumer Price Index (CPI) rose 4.2% year-on-year in May, accelerating from 3.8% in the previous month. This is the highest year-on-year increase since April 2023, indicating that high energy costs due to the conflict with Iran continue to exert upward pressure on prices. Americans have been feeling the pain of rising oil prices since the U.S.-Israel attacks on Iran in late February. Rising energy costs have eroded consumer confidence. Currently, there are few signs that oil tankers will receive continued permits to pass through the Strait of Hormuz, meaning that supply pressures in the global energy market are expected to persist.Following the release of the CPI data, the declines in S&P 500 and Nasdaq 100 futures narrowed.Following the release of CPI data, both WTI and Brent crude oil prices remained largely unchanged. A quick chart provides a glimpse into the pre-market conversion of domestic and international crude oil prices.The US May unadjusted CPI annual rate was 4.2%, in line with market expectations. After the CPI data was released, spot gold rose by about $20 in the short term. A chart provides a quick overview of the pre-market conversion prices of precious metals in the domestic and international markets.June 10th - According to data from the U.S. Bureau of Labor Statistics, seasonally adjusted energy inflation in the U.S. rose 3.9% month-over-month in May, compared to 3.8% in April. Specifically, commodity energy inflation rose 6.7% month-over-month, compared to 5.6% in April; gasoline inflation rose 7% month-over-month, compared to 5.4% in April; and fuel oil inflation rose 3.8% month-over-month, compared to 5.8% in April. Unadjusted energy inflation rose 23.5% year-over-year in May, compared to 17.9% in April; specifically, commodity energy inflation rose 40.6% year-over-year, gasoline inflation rose 40.5% year-over-year, and fuel oil inflation rose 58.9% year-over-year.

June Gold Buyers May Face Difficulties at $1987.60

Larissa Barlow

Apr 14, 2022 10:14

The market's strength is being fueled by demand for a hedge against rising inflation during the Russia-Ukraine conflict, lessening pressure from expectations of an aggressive US interest rate hike, and the US Dollar's intraday reversal top.

 

June Comex gold futures are currently trading at $1982.70, up $6.60 or 0.33 percent from their previous close. The SPDR Gold Shares ETF (GLD) is currently trading at $184.66, up $0.89 or 0.48 percent from its previous close.

 

Gold is regarded as an inflation hedge and a hedge against geopolitical concerns. However, higher interest rates in the United States would increase the opportunity cost of storing non-yielding bullion and strengthen the dollar against which it is valued.

 

However, the price action shows that gold buyers are seeking insurance against inflation and are not very concerned about opportunity costs at the moment. Despite all of the Fed's hawkish rhetoric and anticipation for aggressive rate hikes, we have yet to witness a shift in the direction of inflation.

 

Gold is likely to remain underpinned for the foreseeable future as long as the inflation arrow continues to point upward and the Ukraine war continues.

 

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Technical Analysis of the Daily Swing Chart

According to the daily swing chart, the primary trend is upward. A move over the intraday high of $1985.50 reaffirms the uptrend. A break of $1916.20 will revert the major trend to the downside.

 

On the upside, the retracement zone between $1987.60 and $2009.90 is the nearest objective.

 

On the downside, the long-term Fibonacci level at $1958.70 serves as the initial support, followed by the short-term 50% level at $1932.90.

Technical Forecast for the Daily Swing Chart

The June Comex gold futures market's path through Wednesday's close is likely to be dictated by trader reaction to the 50% level at $1987.60.

Scenario of Bullishness

A sustained move above $1987.60 will signal that buyers are present. This could provide the necessary momentum for a test of the Fibonacci level at $2009.90. This is a trigger point for an upside acceleration.

Scenario of the Bear

A persistent decline below $1987.60 indicates the existence of sellers. They intend to attempt the formation of a secondary lower top. This, if successful, might result in a break into $1958.70.

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