Gold – Volatility Alert as Key US Inflation Prints LoomGold vs US DollarPEPPERSTONE:XAUUSDPepperstoneGold prices have been choppy so far this week, initially reflecting potential trader unease at the possibility of a rate hike from the Federal Reserve (Fed) when they next meet to set US interest rates on Wednesday September 16th, less than 1 week from now. Higher interest rates tend to weigh on prices of precious metals like Gold that pay no interest or dividend and vice versa. However, at the same time, its rebound from weekly lows may underlying the importance of the shiny metal to investors as a hedge against rising geopolitical turmoil in the Middle East and a surge in global bond yields. Gold opened the week at 4422 and then dropped 1.8% to a low of 4341 on Wednesday before quickly recovering back to current levels of 4427 again at the time of writing (0700 BST). Looking forward, the next 48 hours could be pivotal for determining where Gold prices move next. While traders will continue to monitor the fast-moving situation in the Middle East, they may also be preparing for the release of 2 key US inflation reports. The outcome of these prints could shift market expectations further toward pricing a rate hike from the Fed at next week’s meeting, or may indicate another rate pause could be on the cards, depending on whether factory gate (PPI, Thursday 1330 BST), and more importantly consumer prices (CPI, Friday 1330 BST) trend higher, which may force the Fed into action, or are more benign, which could allow the Fed to keep interest rates unchanged for another month to consider the next round of key economic data releases. Technical Update: Rally From 4320 So Far Fails to See Upside Momentum: While Gold has seen a recovery develop following tests of support at 4320 (50% Fibonacci retracement July 17th to August 25th price strength), it has so far failed to attract sufficient trader buying interest to stage little more than a limited rally, with prices topping out at a high of 4443 (September 8th), well short of the first potential key resistance of 4511, the September 3rd high. As the chart above shows, these two technical levels, support at 4320 (50% Fibonacci retracement) and resistance at 4511 (September 3rd high) could prove to be important points to monitor for Gold prices over the next 48 hours into the Friday close and then at the start of next week. Potential Resistance Focus: A successful close above the first potential resistance at 4511 (September 3rd high) may indicate risks are turning towards further upside momentum and tests of higher resistance levels over upcoming sessions. If a closing break above 4511 materialises, it could lead to further price strength to challenge the next resistance point at 4697 (August 25th high), and even 4770 (50% Fibonacci retracement of January 29th to July 17th weakness). If the 4770 level were also to give way on a closing basis it could open potential for a continuation of the advance toward 4889 (April 17th high). Potential Support Focus: While the resistance level at 4511 remains intact, it is possible downside momentum might reemerge. This could lead to retests of the first potential support, identified above at 4320 (50% Fibonacci retracement). Closing breaks below 4320 could increase potential for moves toward the next support at 4232 (68.2% retracement). A closing break below 4232 may then lead to further declines, shifting focus down toward the July 17th low at 3959. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.