Gold Price Chart Hints at Turn as Inflation Fears Crop Up on Earnings Calls


GOLD PRICE OUTLOOK:

  • Gold prices decline as GE, 3M executives worry aloud about inflation
  • US durable goods orders, another batch of Q3 earnings reports eyed
  • Bearish candlestick pattern hints gold prices might be forming a top

Gold prices swung lower while the US Dollar pulled up alongside Treasury bond yields as General Electric CFO Carolina Dybeck Happe said the company expects “significant [inflationary] pressure” in 2022. The commentary came on the global conglomerate came on its third-quarter earnings call. CEO Larry Culp added that he “isn’t ready to say that GE has seen the worst of supply-chain turmoil [as] new problems keep popping up.”

Speaking on the 3M Q3 earnings call shortly thereafter, CEO Mike Roman echoed similar sentiments. He said the duration of [supply-chain] challenges is difficult to predict. 3M CFO Monish Patolawala went to on say the industrial giant expects to continue using higher prices to offset expensive input and logistics costs. He added that “inflation has come in faster than anybody thought.”

Hearing such commentary from some of the world’s largest multinationals seemed to inspire speculation about a faster path toward Fed policy normalization. That in turn drove up yields as well as the Greenback. Not surprisingly, that weighed heavily on the non-interest-bearing and perennially anti-fiat yellow metal.

Looking ahead, a relatively quiet economic data docket is headlined by September’s US Durable Goods Orders report. It is expected to show a drop of 1.1 percent, marking the first decline in five months and the largest one since April 2020. That was amid the worst of the Covid-19 outbreak, when orders plunged almost 12 percent. If surging prices appear to be the culprit, bets on swifter Fed action could multiply.

On the earnings front, heavy-duty names across materials (BASF SE, International Paper), industrials (Boeing) and the consumer-discretionary sectors (McDonald’s, eBay, General Motors, Ford, Hilton) are due to report and hold calls with analysts. If they join the chorus of corporates worrying aloud about sticky inflation, bullion may be pressured further.

GOLD TECHNICAL ANALYSIS – BEARISH CANDLE PATTERN HINTS AT TOPPING

Prices put in a bearish Dark Cloud Cover candlestick pattern at resistance marked by the upper bound of the downtrend from August 2020. Former support at 1808.16 and the four-month range top at 1834.14 topside defenses. The setup hints that a top may be taking shape.

Turning lower from here sees support anchored at 1750.78, with a daily close below that seemingly opening the door for downward extension toward 1717.89. The major bottom at 1676.91 comes into play thereafter.

Gold Price Chart Hints at Turn as Inflation Fears Crop Up on Earnings Calls

Gold price chart created using TradingView

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— Written by Ilya Spivak, Head Strategist, APAC for DailyFX

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter