Daily Brief, Apr 10 – US Inflation Ahead, What to Expect From Gold Today?

Posted Friday, April 10, 2020 by
Arslan Butt • 2 min read

Happy Friday, traders.

On Friday, the forex market is exhibiting thin trading volume and volatility in the wake of good Friday holiday in most of the world. While it’s combined with Easter holidays around the globe, later today, the focus will remain on the US inflation figures as these are expected to drop in the wake of COVID-19 driven lockdown and slowdown in the business sector. The dollar can feel bearish pressure upon its release, which may drive buying in the gold.

US Inflation

The annual inflation rate in the US lessened to 2.3% in February of 2020 from 2.5% in January, which was the most significant rate since October 2018. Numbers came mildly higher than market forecast of 2.2%.

At 15:30 GMT, consumer inflation is expected to remain weaker in the United States. The CPI is likely to drop in the wake of the severe economic impact of the COVID-19 virus. The headline figure has come in at 0.1% for two straight months.

GOLD – XAU/USD – Daily Outlook

Today in the early Asian trading hours, the safe haven metal prices were flashing green and rose above mid-1,700 handles mainly due to risk-off market sentiment in the wake of coronavirus concerns. The broad-based US dollar weakness is also boosting the yellow metal’s buying. At press time, GOLD is currently trading at 1,740.60 and consolidating in the range between 1,676.50 and 1,754.20. At the coronavirus front, as per the latest report, cases of coronavirus registered an increase of 32,449 cases from its previous count and the number of deaths also rose 1,942 to 14,696.

The CDC earlier announced ‘no sail’ order to all cruise ships. As a result, the US continues marked as the world’s second-worst affected nation due to the virus after Italy. The deadly virus continues to weigh on global economic performance. The downbeat data, the US Jobless Claims and Michigan Consumer Confidence, were the latest.

Although, the US policymakers have already shown agreeability on $2.3 trillion worth of economic package whereas, some further aid package is likely on the way to combat the deadly virus. Meanwhile, the Fed gave relief for mid-sized businesses as a part of the stimulus on Thursday.

At the USD front, the greenback dropped broadly, and the reason behind the substantial declines in the dollar is also the US Initial Jobless Claims data release, which showed that the weekly new claims exceeded 6 million for the second straight time last week. As a result, the US dollar index drops 0.06% to 99.46, having hit a daily high at 99.63 in early Asian session.

Looking forward, the market moves are light in the wake of the Good Friday holiday. So, the US Consumer Price Index (CPI) for March, which is expected 1.6% against 2.3% prior on YoY, as well as CPI ex Food & Energy, forecast to drop to 2.3% from 2.4%, will be the key to watch.

Daily Support and Resistance
S1 1585.51
S2 1629.83
S3 1656.59
Pivot Point 1674.15
R1 1700.91
R2 1718.47
R3 1762.79

Technically, the precious metal gold still seems bullish around 1,643 support and bearish below 1,653 resistance. Above 1,653, the next resistance can be seen around 1,671, and violation of this level may head towards the next resistance level of 1,689. Conversely, the support stays around 1,643, and bearish breakout of this level can open further selling trend until 1,635 and 1,623. Overall, trading bias remains neutral as investors are keeping an eye on COVID-19 updates and a weaker dollar. Good luck!

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