Gold has seen a strong bullish rally last week, continuing into this week. Today in 5min, CPI results will be released. This is huge and important news for investors because of the current issues with inflation, and how strong the Fed has been with trying to slow inflation; we will see if any of the current steps taken have actually made an impact.. There is typically a large lag period, sometimes 6-24 months between the effect a policy change can actually have on the economy. So it may be too soon still to see inflation numbers coming down. That said, I expect a large move in either direction today, it just depends on the specific numbers and if they are + or -. Therefore, I will use pending orders in the consolidation range, anticipating price to either break upward or downward with momentum, enough to breakout of the zone and retest and old High/Low. Happy CPI, trade safe!
Note
CPI results were less than forecasted. This tells investors, to some extent, that the actions the Feds have been taking are indeed working to bring down inflation. This also means that in future FOMC meetings, there is less of a probablity the Feds raise rates by 75bps - instead it now becomes more probable they increase by a smaller amount such as 50bps. An important note is that in the past, a real problem has been the Feds loosening their stance too soon; if inflation is actually still continuing to increase, then the last thing they should do is lower rates. So they will likely take a defensive approach, and err on the side of caution, keeping rates higher even if it is only by 50bps to ensure inflation is truly under control. Therefore, I could see this reaction today as an over-reaction; investors may be too eager to see delfation in CPI readings, and this may be a bit too early. So there could be more bearish pressure if/when news of inflation returns. If, however, in the coming weeks there is more talk about how inflation is declining, and the Feds talk about raising rates by less than 75bps, bulls should remain strongest.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.