At 5:15 PM ET, gold futures tied to the most active June 2024 contract experienced a $32 downturn, closing at $2,343. This decline effectively closed the gap formed between last Thursday’s closing price and Friday’s opening price. Last Thursday, May 9, gold futures initiated at $2,316.50 and concluded at $2,340.30. On Friday, gold commenced trading at $2,353.50 and wrapped up just below $2,375, generating a price gap.
Despite Thursday’s intraday peak of $2,354.20 surpassing Friday’s intraday trough of $2,352, a genuine gap persisted between the actual bodies of the Japanese candlesticks from those days. The candlestick’s body denotes the opening and closing prices, thus creating a price void between Thursday’s close of $2,340.30 and Friday’s open of $2,353.50. A gap “fills” when the price returns to the pre-gap level. It’s important to note that the chart employed for this assessment relies on the closing settlement price in New York.
As per Investopedia, in periods of market turbulence, traders can capitalize on significant shifts in asset prices if they can identify and seize opportunities. Gaps present traders with chances to analyze and leverage price movements for financial gain.
Today’s decrease effectively closed the gap from last week as traders likely took profits in anticipation of Wednesday’s April Consumer Price Index (CPI) report, eagerly awaiting additional inflation data.
Piero Cingari, cited by Benzinga, highlights that analysts predict a decline in both the overall Consumer Price Index (CPI) and its ‘core’ component. Economists on Wall Street anticipate that the headline annual inflation rate will decrease from 3.5% in March to 3.4% in April. The annual core inflation rate, excluding the volatility of food and energy prices, is projected to drop from 3.8% to 3.6% year-over-year, marking the lowest figure since April 2021.
Should the real data surpass expectations, the Federal Reserve might opt for fewer rate cuts than the currently anticipated two cuts for this year. Conversely, if the Consumer Price Index (CPI) figures fall below forecasts, the Fed might consider cutting rates before September, a scenario anticipated by two-thirds of economists surveyed by Reuters.
Nevertheless, the Fed is inclined to seek evidence of a prolonged trend. Therefore, unless forthcoming months substantiate the findings of Wednesday’s report, policymakers are unlikely to significantly adjust their position based on a solitary data point.
