Soft US CPI bad for 10-yr treasury yields, good for Gold

London (Feb 26)  FXStreet Editor and Analyst, Omkar Godbole, views that a soft US CPI print might trigger a decline in US 10-year treasury yields and push Gold higher towards $1240/Oz.

Key Quotes

“The 10-year yield failed to sustain gains above the weekly falling trend line resistance at 2.05%. The yields could find some support if the Eurozone GDP data due for release tomorrow shows recovery in growth. However, a weak US CPI and GDP data are likely to keep yields under pressure.”

“Gold prices could rise sharply once the 50.00% Fib retracement of of the uptrend from the low of USD 1131.9 (Nov. 7 low) to USD 1307.3 (Jan. 22 high) located at USD 1219.6 is taken out.”

“A weak CPI print today, coupled with the drop in the Treasury yields could help the metal close the North American session today above the USD 1219.6 mark. Once the resistance is taken out, prices can rise sharply to the weekly 10-MA at USD 1234 and 38.2% retracement seen at USD 1240.00.”

“However, both, Gold and Treasury yields are at a risk of better-than-expected CPI data (higher than -0.1%) and Q4 GDP better than the initial estimate of 2.6%. In such a case, the 10-year yield could make a run at 2.05%, while the Gold prices could dip to USD 1200 levels.”

Source: FXstreet