Market Analysis

XAUUSD Plummets Over 1% Amid Surging US Inflation

Amos Simanungkalit · 13 Mar 202419.2K Views

GBPUSD

The GBPUSD pair faced pressure in the early Asian trading hours, remaining below the psychological barrier at 1.2800. The firmer US Dollar, driven by the February CPI inflation data, contributed to the downward movement. The US CPI rose 0.4% MoM and 3.2% YoY, with Core CPI climbing 0.4% MoM and 3.8% YoY. This data reinforced the strength of the US Dollar, affecting the GBPUSD pair negatively.

Investors are now eyeing the UK GDP growth number for January, expecting a 0.2% MoM increase. This data could provide a crucial turning point for the GBP/USD pair. As of now, the pair trades around 1.2795, showing a marginal 0.02% gain on the day. Traders should monitor the UK GDP release closely, as it could offer insights into the future trajectory of the pair.

GBPUSD Trading Suggestions:

Entry Point: Consider short positions if the UK GDP growth for January falls short of expectations, leading to a break below 1.2780.

Exit Point: Close short positions if the pair rebounds above 1.2820, indicating a potential shift in sentiment.

Alternative Scenario: If the UK GDP exceeds expectations, opening long positions might be considered if the pair surpasses 1.2820.

XAUUSD

XAUUSD prices experienced a late-session plunge in the North American market following a hotter-than-expected US inflation report. The yellow metal tumbled over 1%, with XAU/USD trading at $2,157.00 per troy ounce after reaching a high of $2,184.76. The surge in US 10-year Treasury yields and a stronger US Dollar Index played a pivotal role in the decline.

The unexpected rise in US inflation triggered a sell-off in gold as investors favored higher-yielding assets. The current situation underscores the importance of keeping a close eye on economic indicators that can influence gold prices, especially inflation reports and Treasury yields.

XAUUSD Trading Suggestions:

Entry Point: Consider short positions if the US Dollar Index continues to strengthen and 10-year Treasury yields rise, leading to a break below $2,150.00.

Exit Point: Close short positions if gold rebounds above $2,170.00, signaling a potential shift in market sentiment.

Alternative Scenario: If economic uncertainties arise, leading to a weaker US Dollar and lower Treasury yields, consider long positions if gold surpasses $2,180.00.

WTI

Oil prices saw an uptick on Wednesday, driven by expectations of robust global demand, particularly in the United States. Despite sticky U.S. inflation, the anticipation that the Fed might start cutting rates soon added to the positive sentiment. Brent futures for May delivery were up 0.44% at $82.28 a barrel, while the April WTI crude contract rose 0.49% to $77.94.

The focus on strong global demand, especially from the US, is supporting the oil market. However, traders need to be vigilant about potential changes in the Fed's monetary policy, as any deviation could impact oil prices.

WTI Trading Suggestions:

Entry Point: Consider long positions if global demand expectations continue to support oil prices, leading to a break above $78.50.

Exit Point: Close long positions if there is a significant change in the Fed's stance or if oil prices drop below $76.50.

Alternative Scenario: If concerns about global demand emerge, opening short positions might be considered if WTI falls below $76.50.

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