- Gold Price remains poised for a sustained move below the 200-DMA.
- US dollar surges with yields on hotter than expected inflation data.
- Daily technical setup continues to point to the downside for XAU/USD
Gold Price is clinging onto the recent recovering gains, as bull-bear tug-of-war persists, as investors assess the implications of hotter than expected US inflation data. Although the US April Consumer Price Index (CPI) arrived at 8.3% YoY, beating 8.1% estimates, it was a tag lower than the previous reading of 8.5%. The monthly CPI came in at 0.3% vs. 0.2% expected and 1.2% last. The core CPI figures also outpaced expectations across the time horizon.
The upbeat US inflation data put the 0.75 bps June rate hike expectations back on the table, which triggered a fresh upswing in the US dollar alongside the yields. Gold Price refreshed three-month lows at $1,8835 in a knee-jerk reaction to the data release. Surging inflation re-ignited global growth fears, in the face of the aggressive Fed’s tightening bets. This led to the sell-off in Wall Street while risk-aversion seeped back. Amid falling stocks, Gold Price managed to find a floor and rebounded to close the day above the $1,850 psychological level.
In the first half of Wednesday’s trading, XAU/USD attempted a decent rebound from three-month lows, as the pre-US inflation repositioning and profit-taking spree knocked down the greenback while the Treasury yields also extended their pullback.
Looking ahead, Gold Price will continue to remain at the mercy of the US dollar price action and broader risk tone, as the Fed expectations and growth concerns keep leading the way. At the time of writing, risk sentiment remains tepid, with the S&P 500 futures paring back gains. Investors turn cautious ahead of the UK Q1 GDP report, in light of the BOE’s warnings of an incoming recession later this year.
Gold Price Chart: Daily chart
Gold Price tested offers below the critical 200-Daily Moving Average (DMA) at $1,836 on Wednesday, although bulls defended the latter allowing an impressive recovery.
The renewed upside in XAU/USD seems to be fading this Thursday, as the price is looking to surrender the previous week’s low and the psychological level at $1,850.
If the downside accelerates then a retest of the 200-DMA will be inevitable.
Daily closing below the latter is critical to unleashing more declines towards the February 10 lows of $1,822. The next key support is seen at the $1,800 round figure.
The 14-day Relative Strength Index (RSI) is trading flat to lower below the midline, suggesting that the bearish potential remains intact.
On the flip side, acceptance above Tuesday’s high of $1,865 is needed for Gold bulls to cement a meaningful recovery towards the horizontal 100-DMA at $1,884.
Further, the $1,900 mark will challenge the bearish commitments.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.