Gold has returned to $2700, marking the third time since the sharp drop in gold prices during last November's US presidential election that the price of gold has returned to $2700. The first two attempts were aborted near $2727.

Can we work together to win $2700 and challenge a new high this time? The key point lies in the policy direction after Trump entered the White House on January 20th, whether the turbulent economic environment will accelerate the recession or brake down, and Wall Street has placed its bet on Trump.

As the last US CPI inflation data released during the Biden administration, last night's inflation data fully met market expectations of 2.9%, marking the third consecutive month of inflation increase since the rebound from 2.4% in September last year.

As soon as the news came out, it completely extinguished the market's illusion of interest rate cuts in the first quarter of this year. 2% inflation has always been the ideal target level of the Federal Reserve, and it is only one kilometer away from reaching it. Powell does not have the courage to cut interest rates against inflation, especially after being criticized by Trump, he will not cut interest rates too aggressively to avoid being caught and impeached.

Why does gold rise if the Federal Reserve doesn't cut interest rates? And why does the data continue to rise?

I will explain from two aspects:

1: Last Friday's non farm payroll data grew beyond expectations, with the unemployment rate dropping from 4.2% to 4.1% and employment numbers completely exceeding Wall Street investment banks' expectations. This time, the CPI was also higher than before, which is in line with expectations. These two points basically set the tone for the Federal Reserve not to cut interest rates. Gold has not fallen, and buying is still strong. Traders' understanding of interest rate cuts is no longer just superficial, but a deeper understanding that the Federal Reserve will not raise interest rates. As long as interest rates are cut, gold will be difficult to fall in the long run.

2: Trump's inauguration has added suspense to policy uncertainty. The only reason why gold is bearish is because it has risen too high, and fundamental risk events have not subsided or eliminated. Before Trump's inauguration on January 20th, the US dollar index rose sharply, and I am more concerned that the US dollar will buy expectations and sell reality. Once the US dollar declines, gold will inevitably challenge the high point of 2727 or even a historical high.

Let's continue talking about gold:

On Monday, the gold price did not continue the rise of last Friday and directly swallowed up the previous increase. After rebounding on Tuesday, it continued to wash away and fluctuate. Yesterday, the gold price fluctuated sharply due to the impact of CPI inflation data. The expected inflation data has been digested in advance, and after the news came out, the gold price completed a 2680 top bottom conversion and re challenged $2700.

Secondly, on a technical level, since the adjustment of $2580, the market has been rising from a low point to a high point, forming a slow upward trend at the daily level. After breaking through $2700, the next stop is the front high point of $2720-25, which is a key resistance point to suppress the recent two month rise in gold prices.

As shown in the figure, there was a rapid decline after the US market opened last Friday and last night, and the market continued to rise after the completion of the washout. The overall market trend is still mainly upward, and the adjustment and washout in the middle are just interludes. Today, the key attention should be paid to the 2680-82 area, which was also the key point for last night's top bottom transition.

Today, when the gold price falls back to the 2680-82 range, buy long. If the Asian market rises directly and the European market continues to rise without a significant pullback, then go long before the US market pullback. If the Asian market rises and the European market continues to rise, buy long before the US market pullback is a lure to buy short. Focus on the high point before $2720-2725 above.