Spot Gold continued to tear higher on Monday, rising 1.4% to clock fresh record highs of US$3,635. In addition, Oil prices are recovering modestly, with WTI up 0.8% to US$62.45. The Oil gains follow confirmation from OPEC that October’s production increase will be limited to 137,000 barrels per day, which is smaller than initially signalled.
With limited economic data on the docket today, market participants will be focused on Wednesday’s PPI inflation numbers and Thursday’s widely anticipated US CPI inflation data, ahead of the Fed’s policy meeting. Investors are now fully pricing in a 25 bp Fed rate cut (-27 bps). Interestingly, investors are also expecting nearly three rate cuts this year (-70 bps), which would include a rate cut next week, another in October, and possibly again in December. However, should inflation data show a notable increase, this may help shape expectations for the pace of subsequent policy easing.
Key levels to watch:
USD Index: Daily support has been breached at 97.72; monitor for a retest and follow-through selling
Nikkei 225: Possible consolidation to form after hitting intraday records
Gold: Testing fresh all-time highs above $3,650; assess for pullbacks
Written by FP Markets Chief Market Analyst Aaron Hill
