Gold shrugs off hot inflation data as market focus may be shifting to growth concerns

Yesterday, US PPI came in much higher than expected, but gold's reaction was similar to what we saw after the US CPI release, that is the price initially spiked lower before recovering and rallying to new highs. Treasury yields also fell following the data, pointing to either overstretched positioning or growing concerns about the economic outlook.Despite the Core PCE estimates now showing a monthly increase of 0.34% in October, the rate hike expectations for October actually fell after the PPI release. What’s more interesting is that further out the curve, we’ve seen a dovish repricing. On the geopolitical front, we haven’t seen any change. The Saudi Arabia–Houthi conflict continues, while US–Iran negotiations remain at a stalemate. Meanwhile, oil prices continue to rise amid the ongoing Middle East crisis.Looking ahead, we have the Flash PMIs, the FOMC, the US-Iran negotiations and the US midterm elections as key catalysts. If the economic data starts pointing to deteriorating economic conditions, then we could see the market starting to price in an economic slowdown, which could initially support gold.If the data continues to support strong economic momentum, though, then we could see the precious metal coming back under pressure, unless the Fed continues to stay more dovish than market’s expectations, as that would lower real yields and support gold. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold(CFD contract) is finally approaching the downward trendline. The sellers will likely lean on the trendline, with a defined risk above it, to position for a drop into the 3,885 level. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the 4,700 level next, with the 4,500 level as the first target.GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we have a strong resistance zone around the 4,228 level. If the price probes above the trendline, the resistance will likely be the last line of defence for the sellers. From a risk management perspective, the sellers will likely step in around the trendline and the resistance, with a defined risk above the resistance, to position for new lows. The buyers, on the other hand, will want to see the price breaking above the resistance to open the door for new highs and target the 4,400 level next.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a minor upward trendline defining the bullish momentum. The buyers will likely continue to lean on the trendline, with a defined risk below it, to keep pushing into new highs and target a break above the resistance. The sellers, on the other hand, will look for a break lower to increase the bearish bets into new lows, targeting the 3,885 level next. The red lines define the average daily range for today. This article was written by Giuseppe Dellamotta at investinglive.com.