Gold: Survival Above $1,900 in Question as US CPI Dawns

investing.com:

Last Friday, we cautioned that spot gold, which some investors tend to look at more closely than gold futures, could drop beneath $1,915 an ounce or alternatively run above $1,930. 

We reasoned this was because of a tricky U.S. jobs report for August that put the yellow metal at an inflection point while the dollar sat firmly in the driver’s seat instead for the outcome of most risk trades.

Just two trading sessions later, bullion, which determines the spot price of the yellow metal, fell to an intraday low of $1,907.15 on Tuesday as the dollar extended its run-up from early July. 

In our technical analysis, this makes spot gold vulnerable to lows of beneath $1,900. This is especially so if the latest U.S. inflation reading — via the Consumer Price Index, or CPI, report for August due today — turns out to be dollar-friendly again.

The CPI hit four-decade highs of more than 9% per annum in June 2022 due to trillions of dollars of federal relief spending following the 2020 coronavirus outbreak.

The Fed responded with its most aggressive rate hikes in 20 years, going from a base rate of just 0.25% in March 2022 to 5.5%. The Fed’s actions pushed inflation down to 3.0% per annum by June this year. It is from this point that price pressures 

While pandemic-related spending is in the rear-view mirror and the CPI has stabilized at around 3% per annum now, a robust labor market has allowed Americans to continue spending, preventing the Fed from achieving its target for inflation. 

Fed Chairman Jerome Powell has characterized the labor market's rebalancing as «incomplete.» Powell has stressed that getting inflation back down to the central bank’s 2% goal will require «some softening in labor market conditions.»

The Fed chief made