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Daily Wrap Up 12 October 2021

12 Oct 2021 07:30 PM

Gold set for inflation data and FOMC minutes

Gold prices rose during today's trading, to reach their highest level since last Friday, around the levels of 1,768 dollars an ounce. This came as a result of market fears of increasing inflationary pressures, which led to a state of risk aversion, as US bond yields declined to increase the attractiveness of the yellow metal.

Tomorrow, the financial markets are awaiting inflation data in the United States, where the consumer price index is expected to rise by 5.3% in September. The upcoming reading may provide some support for the yellow metal thus reaching the $1,780 mark.

Also, US stock indices witnessed volatile trading at the beginning of today's trading amid concerns about the impact of rising inflation on the upcoming third quarter profits.

Most of the major companies, including Microsoft, Apple and Facebook, gave up early gains to trade lower. However, Tesla rose by 1.4%, after selling about 56,000 Chinese-made cars in September, the highest number since production began in Shanghai about two years ago, limiting losses on the Nasdaq.

As for other US sectors, 7 of the 11 major sectors of the Standard & Poor's 500 Index fell in early trading, led by energy stocks. The financial sector was down 0.5% ahead of bank earnings that will kick off with JPMorgan on Wednesday.

In the forex arena, the US dollar is still holding on to its highest levels in a year, as the dollar index is trading above the 94 levels at the time of writing, and it is likely to continue rising for its fifth consecutive weeks of gains. This bullish view is supported by the hawkish comments from Atlanta Fed President Rafael Bostic's where he said that slowing labor market numbers should not discourage the Fed from beginning to taper its bond purchasing program.

If we look at the dollar index from a technical perspective, the index did breach the neckline for the double bottom pattern on the weekly time frame and therefore bulls may target the 95.00 and then the 97.00 levels.

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