US inflation data has dented hopes of an early rate cut, and gold's decline has only just begun. It is reasonable to go short now

Gold prices rebounded slightly on Thursday (April 11).Spot goldCurrently trading in 2341.02dollar/Ounce, up about 0.3%, supported by geopolitical concerns. However, the overnight announcementUnited StatesInflation dataHotter than expected, weakenedFederal ReserveEarly interest rate cutAfter the hope of the dollar andTreasury yieldAfter strengthening to a five-month high, gold prices also fell from historical highs to around the 2320 mark on Wednesday. Daocheng Technology financial analysts believe that the decline in gold has just begun, and it is reasonable to short gold now.

(Daily chart of spot gold)

Precious metalPrzemyslaw Radomski, an analyst and founder and editor-in-chief of Daocheng Technology Finance, said that the technical side has been around for several days, and it doesn't matter what kind of event or statistic triggered the move. It seems that the CPI played a role, but in reality, the reasons for the strengthening of the dollar and the decline in gold and stocks were previously known according to various technical indicators.

"We profited from our recent long position in gold when it rose to $2,342, but gold then moved higher before the close of the day, and I mentioned two days ago that in the second intraday gold trading alert on Friday, if I had to consider taking a gold trading position and I couldn't short junior miners, I would take a short position when gold rose above $2,370," he noted.

"This is what just happened, so if someone wants to take a short position in gold, I think it makes sense now," he continued.Gold priceWednesday reversed the trend in classic fashion, but since we've seen these reversals the last few times and they haven't led to a decline, I didn't follow Wednesday's pattern until I saw a change in regular activity. "

Wednesday was the first time since March 25 that gold prices did not reach a new intraday high. Przemyslaw believes that given what is happening in the currency sector, it may not be able to reach that high at all, and may only rise to new highs after a few weeks of decline. "We will see this when gold prices approach the previous highs. At the moment, it is clear that gold has indeed reached the upper part of my target area and that a huge decline has begun. Of course, since it is just starting out, the scale is not very large. This means that trading opportunities are still available."

USDYenGive guidance

The dollar also broke through the 152 mark against the yen on Wednesday, refreshing the nearly 34-year high to 152.24, which also suggests that gold prices will turn to decline.

"In my previous analysis, I wrote that gold's rally is likely to continue as the USD/JPY continues to consolidate, and then I expect gold to start falling once the USD/JPY breaks through new highs, which is exactly what just happened," Przemyslaw said.

"The dollar/yen exchange rate has just risen sharply above its highs in 2022 and 2023, and gold prices have turned downward," notes Przemyslaw. "Gold's decline so far has been relatively small, as has the magnitude of the dollar/yen rally, but the breakout is important for a reason. This is just the first step in another sharp rise in the currency exchange rate, indicating that gold's decline is just beginning."

Outlook for trading opportunities

Przemyslaw believes that although the market has seen some decline, this is only the beginning, and there are still trading opportunities. For investors interested in the future of gold trading, Radomski said that this trend is just beginning, and there are still many opportunities to seize.

At 10:23 Beijing time, spot gold was quoted at 2341.02 US dollars per ounce.