Gold Price Futures (GC) Technical Analysis – Soft CPI Data Could Spike Prices into $1761.90 – $1778.80

Gold futures are trading slightly lower shortly before the release of the U.S. Consumer Price Index (CPI) report at 12:30 GMT. The data is expected to help the Fed determine the size of its future interest rate hike.

Traders expect the CPI report to show that inflation has peaked. This is not expected to stop the Fed from raising its benchmark interest rates by 75 basis points next week, but it could lower the chances of a super-sized rate hike in early November.

At 10:42 GMT, December Comex gold futures are trading $1738.10, down $2.50 or -0.14%. On Monday, the SPDR Gold Shares ETF settled at $160.62, up $0.80 or +0.50%.

Just ahead of the CPI report, traders are pricing in a 90% chance of a 75 basis point rate hike by the Fed on September 21. At the same time, the odds of a 50 basis point rate hike on November 2 are at 76.2% and a 75 basis point hike at 13.7%.

The price action in the U.S. Dollar Index reflects the rate hike expectations. Next week’s Fed rate hike has been priced into the market, but traders are adjusting their positions to the November rate hike expectations and the strong possibility of aggressive rate lifts by the European Central Bank (ECB).

Softer US CPI data is expected to drive the U.S. Dollar lower, which could spike gold prices higher.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher.

A trade through $1778.80 will change the main trend to up. A move through $1699.10 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum.

The short-term range is $1778.80 to $1699.10. The market is currently testing its pivot at $1739.00.

On the downside, support comes in at $1722.80 and $1709.10. On the upside, the key target is a retracement zone at $1761.90 to $1776.70.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term pivot at $1739.00 is likely to determine the direction of the December Comex gold futures contract on Tuesday.

Bullish Scenario

A sustained move over $1739.00 will indicate the presence of buyers. Taking out yesterday’s high will indicate the buying is getting stronger. This could trigger an acceleration into $1761.90, followed by a resistance cluster at $1776.70 to $1778.80.

Bearish Scenario

A sustained move under $1739.00 will signal the presence of sellers. This could trigger a quick break into $1722.80. If this fails then look for the selling to possibly extend into $1709.10.

The major support is clustered between $1699.10 and $1694.50.