Selling gold in anticipation of stronger US dollar

A series of US consumer price indices for September is scheduled to be published tomorrow. One of the key indicators—the year-on-year CPI—is projected to increase from 2.9% to 3.1%. The rest are expected to remain unchanged, as the consensus forecast suggests that most inflation readings will hold at their August levels. However, this might be enough to cause a short-term rise in the US dollar. If the CPI prediction proves accurate, it will slow down the Federal Reserve's (Fed) cycle of policy easing.

Since investors have almost fully priced in a 25-basis-point rate cut at the central bank’s meeting next week, any hint of a delay will not only trigger a strengthening of the greenback but also push gold prices down. The precious metal has already entered a technical correction phase, and mounting inflationary pressure in the US will only exacerbate its decline.

From a technical perspective, it would be preferable to sell gold from the resistance level of $4,240. This entry point provides the best potential profit-to-risk ratio.

The overall recommendation is to sell gold from $4,240. Profits should be taken at $4,140. Stop Loss could be set at $4,300.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.