Gold Loses Momentum as All Eyes Turn to Upcoming US Inflation Data

Published on Sep 13, 2023 14:37

Gold futures lost momentum again in the Asia electronic trades today with the metal falling off the $1940 levels hitting its lowest levels in almost three weeks as investors cautiously awaited a key US inflation reading. MCX bullion broke below Rs 59k mark, hitting the session low of Rs 58523, with further supports expected near Rs 58300 and Rs 57900 levels.

The traders now focused on the upcoming inflation data this week to get a better ideas whether the Fed will hike interest rates at the next meeting of the Federal Open Market Committee later this month. The US dollar index slipped to a one week low of 104.16 today.

The gold market seems to be in a consolidation phase, hovering within the range of $110 ie. $2,010 and $1,900 since June this year. Notably, the latest quarter, from July to September, has exhibited the narrowest range of just $102, particularly in September. This indicates the tightest trading range compared to the preceding two quarters of the year. When we examine the patterns from the first two quarters of the year, we observed ranges of $204 and $185, highlighting the need for a significant breakout to escape this period of stagnation and potentially establish a new trend.

The US is set to release consumer inflation figures on Wednesday and producer inflation data on Thursday. The Federal Reserve is expected to keep interest rates unchanged in its upcoming meeting, but speculation is growing about a potential rate hike in November. The US central bank is widely anticipated to hold interest rates steady at next week’s meeting, while bets for another rate increase in November are edging higher.