Gold Breaks Out

Gold prices have broken out to fresh record highs this week with the futures market soaring to 3,694.75, as of writing. The move comes amidst fresh weakness in the US Dollar has the greenback heads south ahead of tomorrow’s keenly awaited September FOMC meeting. The Fed is widely expected to cut rates by .25% while signalling that further easing is expected over the remainder of the year. Recently, traders Fed expectations have turned increasingly dovish, fuelled by growing weakness in labour market data. Even a fresh rise in US CPI last week didn’t dent easing forecasts with the market currently pegging three .25% rate cuts before year end, starting this week. Indeed, some players are even looking for the Fed to kick things off with a bigger cut this week with the CME showing around a 5% chance of a.5% cut tomorrow.

US Retail Sales Due

Looking ahead today, traders will be watching the latest US retail sales data. Given that this will be the latest tier one US release ahead of the FOMC gold bulls will be hoping for fresh weakness to help fuel further USD selling/gold buying. On the numbers front, the market is calling for the core reading to rise to 0.4% from 0.3% prior with headline to fall to 0.2% from 0.5% prior. In line readings or an upside surprise should have little impact today though any downside surprise should elevate dovish expectations into the Fed, lifting gold further.

Technical Views

Gold

The rally in gold has seen the market breaking out above the 1:1 Fib extension at 3,652.34 with focus now on a continuation towards the 3,800 level, in line with bullish momentum studies readings. Outlook remains bullish while 3,493.81 holds as support.