July 15 — Big Yellow evening trading ideas

Key factors interpretation

1. Cooling CPI data provides short-term long support for gold prices, but upside is limited by the Fed’s hawkish remarks
U.S. June CPI fell 0.4% month-over-month, marking the first month-over-month decline in six years. Core CPI cooled to 2.6%, far below market expectations. The market then cut the probability of a Fed rate hike in July to 16.6%. U.S. Treasury yields and the U.S. dollar index weakened at the same time. The carry cost of non-yielding gold dropped, and the overnight gold price surged sharply from the 3,983 low, topping out at 4,102, drawing a large amount of long capital into the market in the short term.

However, this rally is only a pulse-repair move after being oversold, and does not mean the bearish trend has fully reversed. The key reason inflation has eased is that June international oil prices temporarily dipped. At present, the U.S. and Iran are still confronting each other at the Strait of Hormuz. If shipping conflicts intensify, crude oil prices will rebound quickly and energy-inflation risks will reappear. The Fed’s tightening policy won’t easily pivot.

2. Senator Wosh’s testimony before the Senate is the core catalyst for tonight’s price volatility
Yesterday, Wosh’s written remarks in the House released a clear hawkish signal. He said that a cooling CPI in a single month cannot determine an inflection point in inflation, the Fed will stick to its 2% inflation target, and there is a possibility of further rate hikes. Influenced by this, after gold prices spiked above 4,100 in the early session, profit-taking by longs drove them to exit in a concentrated manner, and the price dropped rapidly. Gold is currently trading around 4,030. Tonight’s full Senate testimony will directly drive the direction of the U.S. session:

• If the speech continues to take a hardline stance against inflation, the U.S. dollar and Treasury yields may rebound, pressuring gold and pushing it weaker, with a pullback to test support near the 4,000 level;
• If the wording is more moderate and signals a slowdown in tightening, longs may be able to once again challenge the 4,070–4,100 combined resistance zone.

Trading strategy

Build positions in the 4,050–4,070 range with orders to sell, set stop-loss defense at 4,088. The first target is 4,025–4,005. If support breaks down, further upside will be at 3,980.

Disclaimer: Investing involves risk; enter the market cautiously.