The price of gold extends the advance following the US Non-Farm Payrolls (NFP) report as longer-dated US Treasury yields remain under stress, but the technical outlook is plotted with mixed signals as the Relative Strength Index (RSI) falls back from overbought territory to display a textbook sell signal.
GOLD PRICE FORECAST: RSI SELL SIGNAL TAKES SHAPE AHEAD OF US CPI
The price of gold approaches the monthly high ($1917) since the 10-Year US Treasury yield slips to some fresh monthly low (1.54%), and new data prints coming from the US may continue to sway gold prices since the Federal Reserve braces to get a transitory increase in inflation.
The upgrade to the US Consumer Price Index (CPI) is anticipated to show the headline printing climbing to 4.7% in May from 4.2percent the month prior, while the core rate of inflation is viewed widening to 3.4percent from 3.0% during precisely the same period. It remains to be seen when the Federal Reserve will react to the CPI as Cleveland Fed President Loretta Mester states that the NFP report is"strong," but claims that there is"further improvement to be made" through a recent interview with CNBC.
The remarks from Mester suggests the Federal Open Market Committee (FOMC) is in no hurry to change gears as"there is several things that are affecting labor supply," along with the central bank could continue to hit a dovish forward advice at the next interest rate decision on June 16 as"various participants noted that it would probably be a time before the market had made substantial further progress ahead of the Committee's maximum-employment and price-stability goals."
Until then, the weakness in longer-dated US yields may keep the purchase price of gold afloat since it extends the series of highs and lows in the June reduced ($1856), but the technical view is plotted with combined signs as the Relative Strength Index (RSI) drops straight back from overbought territory to show a textbook sell signal.
That said, looming developments from the RSI could indicate a bigger pullback in silver if the oscillator snaps the up trend from earlier this year, and the amount of gold may reverse route before the January high ($1959) if it fails to break from the monthly opening array.