GOLD strategy January 16 after bigwin CPIThe US CPI unexpectedly slows down, raising expectations for an early rate cut by the Fed
The US CPI index in December increased less than expected. This development not only helps ease the selling pressure in the bond market but also strengthens confidence that the Fed may cut interest rates sooner than previously anticipated.
The market is now forecasting that the Fed will reduce interest rates by a total of 40 basis points by the end of this year, higher than the 31 basis points reduction forecast before the inflation data was released.
The US Dollar Index dropped by 0.1%, making gold more attractive to holders of other currencies. The yield on 10-year US Treasury bonds also decreased.
Investors are concerned that the possibility of new tariffs after Donald Trump returns to the White House next week could drive up inflation and limit the Fed's ability to reduce interest rates further.
There are several noteworthy updates in the current economy, but there is still some disparity in the economic and monetary policies related to the USD. One significant point is that Trump’s success in this agreement stemmed from his simple but firm demand for an immediate deal. This has pushed not only Israeli Prime Minister Benjamin Netanyahu but also far-right members of his cabinet into a position where they must choose: cooperate or lose the support of the most friendly US president in history.
This suggests a focus on military strategy by Trump before addressing monetary and financial policies, with contrasting opinions and conflicts present in the information. Current views indicate that the following scenarios may arise:
From a technical analysis perspective, gold is still in an uptrend, and the economic news supports this, so buying gold in recent days has been a big win for traders.
However, there are a few factors to consider regarding ongoing conflicts in various countries, with Trump taking initial steps to ease escalating tensions. This may indicate that gold could experience sharp drops at any moment. Looking at the large timeframe chart on H4, there is a double top pattern, signaling that gold may decline in the coming days.
Currently, the view is that gold will have another upward move before a sudden drop occurs due to news related to the conflicts and the double top pattern on the H4 chart. Therefore, the strategy for today is to follow the primary trend and look for buying opportunities.
Trading Zone Strategy
BUY ZONE: 2678 - 2680
SL: 2672
TP: 2684 - 2688 - 2692 - 2695 - ????
BUY ZONE 2: 2662 - 2660
SL: 2655
TP: 2666 - 2670 - 2672 - 2676 - ???
SELL ZONE: 2624 - 2626
SL: 2630
TP: 2620 - 2618 - 2614 - 2610
Please note that today we have data on Core Retail Sales m/m & Unemployment Claims. The price range could move from 30 to 35 pips, so be sure to take note of the price levels marked on the chart.
Always adhere to TP/SL to protect your trading account.
