Two trades to watch: Gold, AUD/USD

Gold looks to US inflation. AUD/USD tests 50 sma after Chinese inflation, real estate concerns.

Gold 1

Gold looks to US inflation

Gold has been advancing in recent sessions on US Dollar weakness and as treasury yields dropped. However, today both yields and the greenback are rising on inflation fears, after Chinese CPI & PPI jumped, pulling dollar denominated gold lower off a two month.

US PPI came in at 8.6% YoY and 0.6% MoM, roughly in line with forecasts. However, with PPI so high, its hard to see CPI falling significantly as business can either absorb the higher costs or pass them on to customers.

CPI could provide clues over the timing of the next rate hike. CPI is expected at 5.3%YoY in October down from 5.4%. Core CPI is expected to hold steady at 4%.

Learn more about trading gold

Where next for gold prices?

A break out a symmetrical triangle in addition to the RSI sitting in bullish territory is keeping the buyers optimistic of further gains.

Buyers need a close over 1335the September high to cement further upside towards 1863.

Meanwhile a fall below 1803 the upper band of the triangle could expose the 200 sma at 1792. It would take a move below 1771 the lower band of the triangle for sellers to gain traction.

Gold chart

AUD/USD tests 50 sma after Chinese inflation, real estate concerns

AUD/USD falls lower after Chinese inflation surged and amid growing concerns over the health of the indebted Chinese real estate sector.

Chinse whole sales inflation, PPI jumped to a 26 year high at 13.5% yoy up from 10.7%. Chinese CPI also riose  to 1.5% YoY, ahead of forecasts of 1.4%.

Chinese authorities have taken steps in recent months, particularly in the commodities markets to cool inflation, however there are few signs of this being reflected in data yet.

Fantasia Holdings a Chinese real estate firm traded 50% lower after failing to make a coupon payment last month. This comes after Evergrande also teetered on the brink of collapse.

US CPI data is due later.

Where next for AU/USD?

AUD/USD faced rejection at the 200 sma, breaking below 0.7475 support and is currently testing the 50 sma at 0.7360.

The RSI has tipped into bearish territory suggesting further losses could be on the cards.

Support can be seen at 0.7315 the late September high opening the door to 0.73 round number and 0.7225 the October 6 swing low.

Should the 50 sma hold a rebound towards 0.74 round number and 0.7480 the September high could be on the cards.


How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.




Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.