Gold struggles to hold onto gains following hot US CPI report

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US CPI showed a larger 9.1% y/y (year-on-year) increase for June with m/m (month-on-month) growth of 1.3% also well past estimates, and a clear worry on the core which excludes food and energy m/m up 0.7% a notch above expectations while y/y barely dropped and at 5.9%.

The financial markets translated it as the US Federal Reserve (Fed) getting even more hawkish, with market pricing of their July meet majority by a heavy margin for a 100bp (basis point) increase, majority 75bp for September, and a peak possibly within the 3.75-4% range by the end of the year. US central bank speak involved non-voter Bostic saying “everything is in play” and in turn failing to assuage central bank tightening fears.

As for the Fed's Beige Book, plenty of districts "reported growing signs of a slowdown in demand, and contacts in five districts noted concerns over an increased risk of a recession", with most expecting "pricing pressures to persist at least through the end of the year".

Regarding the bond market, yields were in for big gains on the front end while the back end suffered, and meant inversions worsened with the 2Y, 3Y, 5Y, 7Y against the 10Y further in negative territory, the 5Y-2Y inverting in yesterday's session. We’ve got US PPI (Producer Price Index) and unemployment claims tonight, retail sales and UoM’s preliminary consumer sentiment and inflation expectations readings tomorrow with Fed members speaking on both days, and let’s not forget earnings from financial heavyweights another factor impacting overall risk appetite.

Gold Technical analysis, overview, strategies, and levels

Both its previous 1st Resistance and 1st Support levels managed to hold and meant one apiece succeeding and failing when it comes to conformist and contrarian strategies (reversals outperforming, breakouts generally failing even if there was some offered past the 1st levels in a session of intraday volatility), in all though failing to shift the narrative just yet of its current bear trend technical overview.

The weekly technical overview remains volatile even as negative bias builds, showing prices won’t be resting for long in any particular zone.

IG client* and CoT** sentiment for Gold

As for trader bias, it remains in extreme buy territory for gold dropping a notch to 84% as of this morning, also extreme long for silver at 79% and platinum at 86%. CoT speculator bias for all three (according to last Friday’s report) is below that of retail traders, and slight sell for platinum at that.

Gold chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.