Gold eases below $1280 as DXY turns positive on the day

Gold retreats more than $10 from daily highs in the NA session.
Greenback gathers strength against its peers following CPI-led sell-off.
US stocks open lower for fifth straight session.

Eren Sengezer FXStreet

After touching its highest level since October 20 at $1289, the XAU/USD pair reversed course in the NA session and turned negative on the day as the USD started to recover its losses. At the moment, the pair is trading at $1278, down $2.3, or 0.2%, on the day.

US CPI data affirms December rate hike

Today's data from the U.S. showed that the inflation measured by the CPI rose by 0.1% on a monthly basis in October, bringing down the annual rate to 2% from 2.2%. Other data revealed that following September's hurricane-related 1.9% growth, retail sales increased by 0.2% in October. Although the initial reaction brought the DXY down to a fresh multi-week low at 93.30, the index staged a decisive recovery. As of writing, the index was at 93.80, up 0.07% on the day.

Comments from White House officials on Wednesday suggested that Republicans were looking to repeal Obamacare to make room for the proposed tax cuts in the federal budget. On Thursday, House Republicans are going to be votine on the tax bill, according to the latest market chatter. In the meantime, after dropping sharply in the first hour of the session, major equity indexes in the U.S. erased a portion of their losses, further denting the demand for traditional safe-havens such as gold. With no more data left in the remainder of the day, the DXY and the market sentiment are likely to drive the price action of the pair.

US stocks sink during opening hour of trade

Technical outlook

The CCI indicator on the daily graph for the pair is struggling to rise above the 100 mark, suggesting that buyers don't show commitment. The initial hurdle for the pair could be seen at $1290 (daily high) ahead of $1300 (psychological level) and $1306 (Oct. 16 high). On the downside, supports align at $1275 (20-DMA), $1270 (200-DMA) and $1260 (Oct. 6 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold bounces off weekly low; Fed hike bets and modest USD recovery keep upside limited

Gold recovers slightly from the weekly low, around the $4,100 neighborhood, though the upside potential seems limited amid a bearish fundamental backdrop. Inflation risks stemming from volatile oil prices underpin prospects for further policy tightening by the US Federal Reserve. Furthermore, a modest US Dollar recovery from a near three-week low could contribute to capping bullion.

Zcash's bullish reversal eyes $1,698 peak on NU7 upgrade

Zcash (ZEC) shows signs of bullish recovery above $1,200 on Wednesday, following a 9% rebound the previous day linked to the upcoming NU7 upgrade. Blockworks released a Zcash holders report on Tuesday, highlighting steady network growth. The technical outlook for ZEC is bullish, with bulls eyeing an extended rally toward $1,698.

US – Midterm update: Pre-election tail risk scenarios

With two weeks until the US midterm elections on 3 November, early voting has already opened in more than 40 states. Prediction markets are broadly unchanged since we published our Midterm update, 13 October. The prediction market Polymarket continues to see Democrats winning both chambers as the most likely outcome, with a 62.5% probability.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.