Gold prices have surged to five-month highs as the recent US inflation data showed prices rising more than expected. While the data increased expectations of more aggressive interest rate hikes by the Fed, gold prices still rose, possibly signaling that markets fear the Fed is still lagging behind inflation. Technical analysis shows gold testing resistance and may challenge the $1,916 high. Sentiment data finds traders remain net long on gold despite being less long than recent weeks, suggesting gold prices could continue rising in the near term.

1. Gold Price Surge Signals Markets
Fear Fed Lagging On Inflation

2. Points To Be Discussed Today:
• Gold Prices Trading Highs
• Long & Short End Year Yields
• Gold Technical Analysis – Ready To Test Above
$1900?
• XAU/USD Remains Vulnerable To Dollar Strength
• Gold Price Analysis , Weekly & Daily Chart
• Gold IG Client Sentiment
• Forex Seasonality In Gold (Via XAU/USD)

3. Gold Prices Trading Highs
• Gold prices are trading near five-month highs having
surged mid-week as October’s US CPI report put price
growth at an eye-watering 6.2 percent on-year.
• Interestingly, the metal rallied even as the data stoked
a hawkish shift in Fed policy bets, pulling the US Dollar
higher.
• Markets have seemingly added a full additional rate
hike into priced-in projections of the rate hike path
implied in Fed Funds futures.
• Before the CPI release, 145 basis points (bps) in hikes
through the end of 2024 looked to be baked into asset
values. Now, 171bps appear on the menu.

4. Long & Short End Year Yields
• The shape of the yield curve also changed. The long end (5-
to 10-year Treasury yields) flattened while the short end (3-
month to 2-year yields) and the belly (2- to 5-year yields)
steepened.
• That seems to imply that tightening is now expected to
begin sooner and proceed more aggressively than
previously thought.
• Seeing gold rise against such a backdrop – which might
have been expected hurt the non-interest-bearing, anti-fiat
metal – might signal that traders still worry about a Fed
that is behind the curve even as the priced-in tightening
timeline is accelerated.
• That might portend room for hawkish repricing to continue.

5. Bullion As A Timing Indicator
• Bullion may thus emerge as a handy timing indicator as
markets attempt to coalesce around a baseline outlook.
• If gold prices begin to struggle as policy bets grow sterner
and the Greenback gains, that might warn that the current
readjustment is on course toward exhaustion.
• In the near term, November’s University of Michigan
gauge of US consumer confidence as well as the JOLTs job
openings figure are in focus.
• Sentiment is expected to warm up a bit – albeit within the
narrow range prevailing since August’s inflation-fueled
plunge – while vacancies tick down for a second month.

6. Gold Technical Analysis – Ready To
Test Above $1900?
• Gold prices are testing resistance capped at
1870.75.
• A break above that confirmed on a daily
closing basis might set the stage to challenge
the swing high at 1916.53.
• Near-term support is anchored at 1827.51
and followed swiftly by another notable level
at 1804.10. Pushing below that may expose
1750.78.

7. Gold Technical Analysis – Ready To
Test Above $1900? - I

8. XAU/USD Remains Vulnerable To
Dollar Strength
• Gold (XAU/USD) remain supported as inflation
expectations weigh on risk sentiment
• Inflation, COP26 and global interest rates
remain key catalysts for price action
• Fed interest rate decision and remain key
catalysts for Gold prices.
• After six consecutive days of gains, Gold prices
have run into a wall of resistance above the
key psychological level of $1,860.

9. Higher Inflation Numbers And
Geopolitical Tensions
• Although the combination of higher inflation numbers
and geopolitical tensions continue to weigh on risk
sentiment, increased expectations of higher rates have
boosted the demand for precious metals which are
likely to weigh on risk sentiment for the foreseeable
future.
• Although Gold continue to hold a reputation as a
hedge against inflation, higher than expected CPI data
boosted the demand for safe-haven precious metals,
allowing Gold to continue along an upward trajectory
that continues to hold, at least for now.

10. Gold Price Analysis
• With inflation pressures on the rise, Gold and
Silver prices continue to test critical levels of
support and resistance, bringing fundamentals
to the forefront of risk sentiment.
• From a technical standpoint, price action on
the weekly chart has recently broken above
trendline support with the commodity
channel index (CCI) lingering in overbought
territory.

11. Gold Weekly Chart

12. Gold Daily Chart

13. Gold IG Client Sentiment

14. Gold Bullish

15. Gold Bullish - I
• Gold: Retail trader data shows 64.25% of traders are net-long with
the ratio of traders long to short at 1.80 to 1.
• Our data shows traders are now at their least net-long Gold since
Aug 19 when Gold traded near 1,780.78.
• The number of traders net-long is 2.38% higher than yesterday and
8.95% lower from last week, while the number of traders net-short
is 8.69% higher than yesterday and 17.84% higher from last week.
• We typically take a contrarian view to crowd sentiment, and the
fact traders are net-long suggests Gold prices may continue to fall.
• Yet traders are less net-long than yesterday and compared with last
week.
• Recent changes in sentiment warn that the current Gold price
trend may soon reverse higher despite the fact traders remain net-
long.

16. November FX Seasonality Overview
• The second-to-last month of the year typically
invites great returns for US stocks, while
leaving gold prices lower and the US
Dollar trading sideways.
• November is actually the best month of the year
for the US S&P 500, for both the 5- and 10-year
look-back periods.
• Commodity currencies tend to fare well during
November, but the British Pound likewise tends
to see some of its best performance during the
year.

17. November FX Seasonality Overview - I
• The beginning of the month warrants a review of
the seasonal patterns that have influenced forex
markets over the past several years.
• For November, our focus is on the trailing 5-year
and 10-year performances, both of which fully
capture trading during the era of quantitative
easing and expanding government deficits since
the 2008/2009 Global Financial Crisis – not
dissimilar from the environment we find
ourselves in during the coronavirus pandemic
recovery.

18. Forex Seasonality In Gold
(Via XAU/USD)

19. Forex Seasonality In Gold
(Via XAU/USD) - I
• November is a very bearish month for gold
(XAU/USD), from a seasonality perspective.
• Over the past 5-years, it has been the worst
month of the year for the precious metal,
averaging a loss of -3.21%.
• Over the past 10-years, it has been the
second worst month of the year, averaging a
loss of -2.7%.

20. Gold Price Surge Signals Markets
Fear Fed Lagging On Inflation

21. Thanks for listening
Gold Price Surge Signals Markets
Fear Fed Lagging On Inflation