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Fundamentals

During Thursday's (October 12th) Asian session, spot gold ascended and it is now trading at 1876. The U.S. September PPI data published overnight indicated a surprising rebound in inflation, and the Fed's minutes showed that there are differences in views on interest rate hikes. However, officials agreed to cautiously promote the policy, strengthening the market expectation of the Fed suspending rate hikes in November and thus, the market continued to trade suspension of interest rate hikes. As a result, the gold price continues to rebound. Tonight, investors should continue to pay attention to the CPI data, which is expected to extend the momentum of the PPI, and it is better to go long on gold after retracements.

Data: U.S. PPI rose 2.2% YoY in September, greatly exceeding expectations of 1.6%. It is the third consecutive month that the PPI grows higher than expected, a sharp rebound from August's 1.6%, and the largest YoY increase since April. Besides, the PPI grew by 0.5% MoM, over the expected 0.3%. The U.S. core PPI rose 2.7% YoY in September, compared with expectations of 2.3%, a sharp rebound from August's 2.2%. Furthermore, the core PPI ascended 0.3% MoM, compared with expectations of a 0.2% rise.

News: According to the Fed minutes, most Fed officials believed that another interest rate hike would be appropriate. Then, the majority of the participants continued to agree that the future course of the economy is "highly uncertain", while participants said that inflation is "unacceptably high", and more evidence is needed to be convinced that Price pressures are weakening. Meanwhile, the GDP growth for the rest of the year will be affected by the auto workers' strike, and several participants pointed out that even after the start of interest rate cuts, balance sheet shrinkage may continue "for a period".

Today's focus: U.S. CPI data, and the crude oil inventory data.

Technical Analysis

Gold oscillated higher yesterday, and it was emphasized that investors should go long before gold reached the key resistance. It is unnecessary to consider too much, as any retracements will be chances to buy in. Moreover, gold once plunged to 1858 yesterday, offering a good chance to go long, and gold appreciated by 15 dollars. For gold bears, it was recommended to wait until gold reached the key level at 1884, where investors should go short. It was the strong resistance level before and turned into resistance. If gold gets closer, aggressive investors should go short, but if gold retraces, going long will be more appropriate. Now, the MACD indicators show a golden cross and expand at the oversold area, suggesting that gold is still under a bullish trend, and investors could keep buying at lows until gold approaches the key level.  

Trading recommendations: Buy low and sell high. If gold retraces to 1860 today, investors could go long with small positions, and set the stop-loss at 1855. To take profits, the first target will be at 1884, where they can move the stop-loss to breakeven, and the second target can be fixed at 1900. However, if gold appreciates to 1884, investors could go short with small positions, and set the stop-loss at 1889. To take profits, the first target will be at 1860, where they can move the stop-loss to breakeven, and the second target will be 1844.

Trading Recommendations

Trading direction: Short

Entry price: 1884

Target price: 1860

Stop loss: 1889

Support: 1860.000/1844.000

Resistance: 1884.000/1900.000