Gold Retreats As Inflation Exceeds Expectations

Key Insights

• U.S. Inflation Rate exceeded expectations, providing significant support to the U.S. dollar and pushing Treasury yields to new highs. 
• Strong dollar and higher Treasury yields put pressure on gold and silver. 
• WTI oil is mostly flat as traders stay focused on supply problems. 

Gold Is Under Pressure

Gold is losing ground after the release of the U.S. inflation reports as the U.S. dollar rallies.

U.S. Inflation Rate increased by 8.3% year-over-year in August, compared to analyst consensus of 8.1%. On a month-over-month basis, Inflation Rate increased by 0.1%, while analysts expected that it would decline by 0.1%.

Not surprisingly, traders rushed to buy the American currency. Inflation remains a big problem, so the Fed will have to raise rates aggressively, which is bearish for gold and other precious metals.

Gold faced strong resistance near the 20 EMA at $1730 and pulled back. If gold settles below the support at $1715, it will head towards the next support level at $1700. A move below this level will open the way to the test of the support at the yearly lows near $1680.

Silver Moves Away From The $20 Level

Silver is losing ground after yesterday’s strong rally as the U.S. dollar is moving higher after the release of inflation reports. The resistance at the $20.00 level remained the key obstacle on the way up for silver.

Meanwhile, platinum moved back towards the $900 level, while palladium dropped to $2170. Precious metals will remain under significant pressure if the U.S. dollar continues to gain ground against a broad basket of currencies.

WTI Oil Remains Stuck Near $88

WTI oil is mostly flat after the release of inflation reports. Most likelky, traders will remain focused on potential supply problems ahead of winter. These worries have offset recession fears and pushed WTI oil away from recent lows.

To continue the rebound, WTI oil needs to settle above the psychologically important $90 level. In this scenario, WTI oil may gain additional upside momentum and move closer to the $100 level in the upcoming weeks.

Natural Gas Pulls Back After Yesterday’s Rally

Natural gas markets are losing ground as traders take some profits off the table after the recent rebound. In Europe, natural gas prices are moving higher, while traders are waiting for the EU-wide measures that could deal with the current energy crisis.

The weather forecast indicates that demand for natural gas could be low in the next seven days, but traders will be focused on whether natural gas stocks are increasing at a robust pace ahead of the winter.

Copper Settled In The $3.60 – $3.70 Range

Copper managed to settle above the resistance at $3.60 and moved back into the $3.60 – $3.70 range. The general optimism in commodity markets provided significant support to copper markets in recent days.

The key resistance for copper is located near the $3.70 level. In case copper manages to settle above this level, it will have a great chance to gain significant upside momentum.

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