Gold Rallies As U.S. Inflation Drops To 7.1%

Key Insights

• The surprising U.S. inflation data provided significant support to commodity markets. 
• Gold managed to settle above the important $1800 level. 
• Copper rebounded towards $3.90.

Gold Gains Ground As Dollar Retreats

Gold rallied above the $1800 level after U.S. reported that Inflation Rate declined from 7.7% in October to 7.1% in November, compared to analyst consensus of 7.3%.

The surprising inflation data put significant pressure on the U.S. dollar and pushed Treasury yields to lower levels. Weaker dollar and lower yields provided significant support to gold and other precious metals.

The nearest resistance level for gold is located at $1815. In case gold manages to settle above this level, it will head towards the next resistance at $1830. A move above $1830 will push gold towards the resistance at $1850.

On the support side, gold needs to settle back below $1800 to have a chance to gain downside momentum in the near term. The next support level is located at $1785. If gold declines below this level, it will head towards the support at $1775.

Meanwhile, silver moved towards the $23.80 level. Platinum tested the $1050 level, while palladium settled back above $1900.

WTI Oil Continues To Rebound

WTI oil rallied above $74.50 after the release of U.S. inflation reports. Traders bet that the Fed will be less hawkish, which will be bullish for the economy.

From a big picture point of view, WTI oil continues to rebound after the strong pullback. Today’s U.S. inflation data may lead to a short squeeze and push oil prices above the $75 level.

Natural Gas Rallies As Traders Bet On Colder Weather

Natural gas moved towards the $7.00 level as traders prepared for colder weather and higher demand for natural gas.

In case natural gas manages to settle above the $7.00 level, it will move towards the next resistance at $7.20. A successful test of the resistance at $7.20 will open the way to the test of the resistance at $7.55.

Copper Tests The $3.90 Level

Copper  gained strong upside momentum after the release of U.S. inflation data and moved towards the $3.90 level. Copper has been trading in the $3.80 – $3.90 range in recent days, and it looks that it may be ready to move towards the psychologically important $4.00 level.

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