Gold Surge Ahead Of CPI

* Dollar index poised ahead of Wednesday’s CPI reading.

* Gold prices are hovering at all-time high levels while Oil prices are stimulated by tightening supply outlook.

* BTC prices are whisker away from its all-time high at $73630.

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Fundamental Overview

Ahead of Wednesday’s critical U.S. Consumer Price Index (CPI) release, U.S. stock markets displayed restraint, while the Dollar Index saw a slight dip. Financial markets have significantly recalibrated their expectations for Federal Reserve rate cuts, now anticipating a mere 60 basis points decrease throughout the year, a dramatic shift from the 150 basis points reduction predicted at the beginning of the year. Meanwhile, yields on U.S. long-term treasuries have climbed to their highest since the previous November, suggesting a possible alignment with the dollar’s trajectory. However, the spotlight is firmly on the imminent CPI announcement for further clarity on inflation trends.

In the commodities realm, gold continues to hover near its all-time highs, and oil prices are nudging towards their zenith since last October. The upward pressure on oil prices is attributed to persistent supply concerns and the volatile geopolitical landscape in the Middle East.

On the international front, the Reserve Bank of New Zealand (RBNZ) is on the cusp of revealing its interest rate verdict tomorrow, April 10th. The general expectation is for the central bank to maintain the official cash rate at 5.50%, setting the RBNZ apart from its global counterparts, which have been leaning towards rate cuts. The forecast of a stable interest rate policy could further amplify the New Zealand dollar’s appeal in international forex markets.

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Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (85.5%) VS -25 bps (14.5%)  

Market Overview

Economic Calendar

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Market Movements

DOLLAR_INDX, H4

The Dollar Index, which tracks the performance of the US Dollar against a basket of major currencies, experienced a slight retreat as investors awaited the release of upcoming US inflation figures later this week. Despite positive reports on Nonfarm Payrolls and the Unemployment Rate, economists anticipate a potential decline in inflation compared to the previous reading. Projections suggest a 0.30% monthly increase in the headline Consumer Price Index (CPI), down from February’s 0.40%. Heightened market uncertainties prompted some investors to diversify their portfolios, reducing demand for the US Dollar.

Currently, the Dollar Index is trading lower, hovering near the support level. The Moving Average Convergence Divergence (MACD) indicates increasing bearish momentum, while the Relative Strength Index (RSI) is at 40, suggesting that the index might extend its losses as the RSI remains below the midline.

Resistance level: 104.60, 104.95

Support level:104.00, 103.65

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XAU/USD, H4

Gold prices demonstrated resilience amidst escalating geopolitical tensions in the Middle East and stalled ceasefire negotiations, maintaining their status as a safe-haven asset amid heightened demand. With geopolitical risks intensifying, market volatility is expected to remain elevated as investors seek refuge in gold. Anticipation of the upcoming US inflation report may further bolster demand for the precious metal, prompting investors to closely monitor developments for additional trading signals amidst ongoing geopolitical uncertainties.

Currently, gold prices are trading higher following a breakout above the previous resistance level. The Moving Average Convergence Divergence (MACD) indicator has shown diminishing bearish momentum, while the Relative Strength Index (RSI) stands at 61, suggesting that the commodity might extend its gains towards the resistance level as the RSI remains above the midline.

Resistance level: 2350.00, 2370.00

Support level: 2335.00, 2320.00

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CL OIL, H4

Oil prices continued their upward momentum amidst ongoing fears of supply disruptions in the market. Geopolitical tensions in the Middle East, exacerbated by the failure of ceasefire talks between Israel and Hamas, supported oil prices. Despite efforts by the US and its allies to broker peace, prospects for an immediate resolution appear to be waning, contributing to sustained concerns over supply stability.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 60, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 87.90, 89.10

Support level: 83.35, 83.05