Chart of the day - GOLD (13.04.2021)

Release of the US CPI data for March at 1:30 pm BST is a key event of the day. Reading is expected to show headline price growth accelerating from 1.7% YoY in February to 2.5% YoY in March. Core gauge is seen moving higher from 1.3 to 1.5% YoY. Fed has played down any price growth concerns recently, insisting that inflation pick-ups will be transitory. Low base effect from a year ago seems to support this effect. Of course, overshooting the target range would cause concerns to mount but even in this case Fed could play it down, saying that it now focuses on how inflation averages over a given period of time. Speaking of the Fed, a number of US central bankers will deliver a total of 7 speeches this afternoon and today’s inflation data may be one of the topics addressed.

Inflation data and Fed speeches are likely to have an impact on USD, gold and possibly equity markets. Taking a look at gold, we can see that the commodity has enjoyed a recovery move over the past two weeks. However, the upward move was halted at the end of last week by the 50-session moving average (green line) and the upper limit of recent short-term trading range at $1,740. Higher than expected inflation in March could hurt gold prices as continued pick-up in price growth would justify launching a taper discussion.