Gold trading reminder: The impact of inflation continues to ferment, and gold prices have been six consecutive yangs or challenge 1900

Spot gold held steady around 1861 during the Asian session on Friday (November 12). Gold prices rose six times on Thursday (November 11) after strong US Consumer Price Index (CPI) data pushed investors to buy gold, which is seen as a hedge against inflation, and fading sentiment in equities also supported gold prices, but a stronger dollar dragged down gold prices.

During the day, the main focus is on the University of Michigan Consumer Confidence Index and job vacancy data, in addition, the speech of New York Fed President Williams also needs to pay attention.

Fundamentals are bullish

【Citi: Gold price is expected to challenge $1900 in the short term】

A team of Citi strategists led by Aakash Doshi reported on Wednesday that if gold remains around $1,850 an ounce this week, new investors could pour in further, with $1,900 expected to be the next target price.

Even if inflation provides solid support for gold, Doshi also said that the strengthening of the US dollar combined with the Fed's aggressive pricing of short-term interest rates may create resistance to this strong momentum in gold prices.

The U.S. reported a more than 30-year high for October CPI on Wednesday, and the monthly growth rate was also much higher than market expectations, indicating that inflation remained high.

Citi raised its 0- to three-month gold target by 11% to $1,900 an ounce and raised its Q4 gold price forecast to $1,800 from $1,700 an ounce.

【The Dow has fallen three times in a row, and the popularity of the stock market has faded】

The S&P 500 in U.S. stocks closed only slightly higher on Thursday, with the Dow falling three times in a row and stocks no longer popular. The day before, a higher-than-expected inflation report hit investor sentiment and halted a trend of consecutive record closing highs.

Disney fell after announcing disappointing results, dragging the Dow lower.

The bond market is closed and there is a lack of catalysts to drive the market in the absence of economic data and the end of the third-quarter earnings season.

Peter Tuz, president of Chase Investment Counsel, said: "It's really hard to judge the trend on a day like today, because basically half of the market is closed, and specific companies and industry events are driving today's trend. ”

Tuz added: "Tomorrow there will be a lot more trading volume than today, so we'll have to wait and see. ”

【Gold ETF holdings on 11 November: SPDR gold holdings increased by 0.58t】

Gold ETFs data from November 12 showed that as of November 11, the world's largest gold-backed ETF, SPDR Gold Trust, had a gold holding of 975.41t, an increase of 0.58t from the previous session.

Fundamentals are bearish

[The U.S. dollar hits its highest in nearly 16 months, and high U.S. inflation readings push fed to raise interest rates early]

The dollar hit a nearly 16-month high against the euro and other currencies on Thursday after the U.S. released its highest inflation reading in 30 years, raising bets that the Fed would tighten monetary policy faster than expected.

The U.S. Consumer Price Index (CPI) rose the most year-on-year in October since 1990, data released Wednesday, fueling speculation that the Fed will raise interest rates earlier than expected, with traders questioning the Fed's stance that the current high inflation is "temporary."

The dollar index is set to rise for the second straight session, rising at one point to its highest since July 22, 2020, at 95.19.

Vassili Serebriakov, a FX strategist at UBS, said that feeling that trading is still affected by CPI, the path of least resistance in the short term appears to be a higher dollar, and stronger inflation weakens the temporary theory, which means that the Fed may need to tighten monetary policy earlier.

Joseph Trevisani, a senior analyst at FXstreet.com, a website that tracks financial markets, said the second consecutive day of inflation-related bets and the U.S. Treasury market's closure due to Memorial Day could lead to fewer trades, amplifying price volatility.

Generally speaking, when the bond market is closed, liquidity is reduced, and the trend tends to be amplified, because the liquidity that absorbs any particular trend will be reduced, he said.

Overall, inflation concerns continue to support gold prices to continue to rise, while cooling market risk sentiment has also strengthened the dollar. In the case of the inflation crisis is temporarily difficult to eliminate, the gold price will still be strong in the future.

This article originated from Huitong Network