Oil price swings rattle gold as US CPI takes focus

Gold slipped back under pressure yesterday after crude jumped to fresh weekly highs. The broader Middle East backdrop is largely unchanged, with the Houthis still striking Saudi Arabia and talks between the US and Iran stuck in a stalemate.

That backdrop will keep a lid on gold's gains unless the Federal Reserve turns out more dovish than markets expect, which would send real yields lower.

Attention stays on US-Iran developments, while tomorrow's US CPI report is the other important near-term catalyst.

A core inflation figure above forecasts could lift the odds of a Fed rate increase in October and push bullion lower. A subdued report, in contrast, should ease concerns about rate hikes even more and give the precious metal an additional lift.

Daily gold technical analysis

On the daily timeframe, gold (CFD contract) is closing in on the downward trendline. Sellers are likely to defend that line, placing their stop above it, as they position for a fall to 3,885. Buyers, meanwhile, will be waiting for a break higher to join the move, with a first target of 4,500 and a longer-term goal of 4,700.

4-hour gold technical analysis

The 4-hour timeframe suggested a false breakdown yesterday, with price slipping under the upward trendline before recovering above it. From a risk-management angle, sellers get a more favourable risk/reward opportunity near the downward trendline, placing risk above 4,228 and aiming for a decline to 3,885. Buyers, however, need a break above the trendline and 4,228 to clear the way toward 4,400.

1-hour gold technical analysis

On the 1-hour timeframe, there is little extra to note: sellers are best advised to wait for price to reach the trendline, while buyers still need a breakout.

Catalysts coming up

The US CPI report is due tomorrow, with US PPI, retail sales and the latest jobless claims figures on Thursday.