Spot gold slips due to lack of interest – Yields edge higher on higher inflation

April 12, 2021 - 1 month ago
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The precious yellow metal direction was mixed on Friday, however, the rise in U.S. Treasury yields put a dent in the bullish bullion sentiment, while a more upbeat March U.S. producer price index (PPI) data release showed inflation had risen +1.0%, compared with the forecast of an increase of 0.4%.

The PPI surged +4.2% year over year, which marks the largest annual gain in 9-1/2 years.

The U.S. producer price index measures wholesale price inflation and jumped in March. The 10-year Treasury yield ticked slightly higher to 1.66% following the inflation data.

Elsewhere, U.S. Federal Reserve Chair Jerome Powell said in a TV interview, the U.S. economy is at an “inflection point,” with hopes that inflation and hiring will accelerate in the coming months, but there are dangers if a hasty reopening leads to a continuing uptick in coronavirus cases.

Viewing the technical standpoint for the Relative Strength Index (RSI), 3-daily ‘lookback’ indicator broken down as it slips through the 50-midway point, which now supports a weak negative signal, while the Moving Average Convergence Divergence (MACD) is mixed as it hovers over the 0.00 axis.

The ADX indicator is ranging as it declines. With the upside target at $1,752-54 reached, now views an extension to $1,760-65. Reassess from there.

That said, a close beneath $1,719-22 would potentially negate the upside call and reinstate the $1,680 target.

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