Gold prices edged higher following the Labor Departments report on consumer prices. Gold prices broke out above resistance on Friday following a softer than expected employment report but has since ease and forming a bull flag continuation pattern.
Gold prices edged higher on Wednesday, but appears to be forming a bull flag pattern which is a pause that refreshes higher. The dollar edge higher following the slightly stronger than expected headline CPI report, paving the way for lower gold prices. Momentum is moving lower reflected by the fast stochastic, and the oscillator is printing a reading of 82, above the overbought trigger level of 80 which could foreshadow a correction. Momentum is decelerating as the MACD histogram is printing in the black with a flat trajectory which points to consolidation.
The Consumer Price where flat in November and this followed a 0.3% increase in October. It was the weakest reading in eight months. On a year over year basis CPI rose 2.2% slowing from October’s 2.5% rise. Excluding the volatile food and energy components, the CPI increased 0.2% percent, matching October’s gain. In the 12 months through November, the so-called core CPI increased 2.2% after climbing 2.1% in October. Expectations where for CPI to remain unchanged and the core CPI gaining 0.2 % in November.
While core prices remain firm, the inflation outlook is benign amid falling oil prices and signs of slowing economic growth both in the United States and overseas. A report on Tuesday showed producer prices edging up 0.1% in November after accelerating 0.6% in October.
In November, gasoline prices tumbled 4.2% after rebounding 3.0% in October. With oil prices falling sharply since October on signs of an economic slowdown, gasoline could become even cheaper. Brent crude oil prices have dropped almost 30%. Food prices rose 0.2% after dipping 0.1% in October. Food consumed at home gained 0.2% in November after dropping for two straight months.
This article was originally posted on FX Empire
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