Gold prices remain attractive but may pause ahead of CPI
LONDON (Scrap Register): Gold prices could pause as markets await the U.S. Consumer Price Index on Thursday, but the metal still looks attractive overall, said Lukman Otunuga, research analyst at FXTM.
Although North Korean tensions have offered some support to the yellow metal, the upside could be capped ahead of Thursday’s inflation data.
“With the pending U.S. CPI release likely to influence expectations over when the Fed will raise rates, gold -- which remains highly sensitive to rate hike expectations -- will be directly impacted,” Otunuga added.
“Weak data should support gold. I believe gold still remains attractive, despite the return of risk appetite, with further upside on the cards as heightened political uncertainty in Washington and geopolitical concerns encourage investors to seek safety,” the analyst continued.
Otunuga also described gold as bullish on a daily technical chart. A breakout above $1,340 should encourage a further appreciation higher towards $1,350. In an alternative scenario, a breakdown and repeated weakness under $1,325 is likely to encourage a decline towards $1,315 and $1,300, respectively.