• Gold is pressured as the US dollar continues to make highs.
  • The US CPI leaves the door open for aggressive tightening by the Fed.

The price of gold was pressured on Tuesday and has fallen by over 1.3% on the day. At the time of writing, the yellow metal is testing the $1,700 level and has reached a low of $1,697.11 so far on the day. Consumer prices handily beat expectations according to the Labor Department report, underlying inflation picked up amid rising costs for rents and healthcare. 

This sent both the US dollar and bond yields sharply higher as the expectations for an oversized rate hike from the Federal Reserve. Inflation in the United States ran at an 8.3% annualized pace in August, ahead of expectations for an 8.0% rise. Traders expect 75 basis points when its policy committee meets next week and lower market hopes for a smaller increase. However, there is a one-in-five chance that the Fed will raise rates by a full percentage point, up from zero a day before the CPI report according to FEDWATCH.

The dollar and bond yields both rose following the release of the data, on expectations higher interest rates are on the way, bearish for gold since it offers no yield. The DXY index, a measure of the US dollar vs. a basket of currencies rallied to a high of 109.853 while the yield on the US 10-year note rose to 3.460%, over 1.8% higher on the day. 

''While prices are weak, precious metals' price action is still not consistent with their historical performance when hiking cycles enter into a restrictive rates regime,'' analysts at TD Securities explained. ''We expect continued outflows from money managers and ETF holdings to weigh on prices, which will ultimately raise the pressure on a small number of family offices and proprietary trading shops to capitulate on their complacent length in gold.''

Gold technical analysis

The bulls have been stripped of their moment and the focus is back on the downside while below the neckline of the daily M-formation, as follows:

Zooming out, we can see that the downside target has been a key level for a considerable amount of time:

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.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

Aussie Retail Sales: Misses expectations, AUD remains pressured

Aussie Retail Sales: Misses expectations, AUD remains pressured

The primary gauge of Australia’s consumer spending, Retail Sales, has come out as follows: Australia October Retail Sales -0.2 pct MoM s/adj (Reuters poll +0.5 pct).0.6700 area holds following failures at 4-hour resistance near the neckline of the M-formation.

AUDUSD News

EUR/USD retreats towards 1.0350 amid risk aversion ahead of EU inflation, Fed’s Powell

EUR/USD retreats towards 1.0350 amid risk aversion ahead of EU inflation, Fed’s Powell

EUR/USD remains pressured around 1.0380, after beginning the week’s trading with a downside gap, as the risk-off mood underpins the US Dollar’s demand during Monday’s Asian session. Also likely to have weighed on the quote could be the downbeat comments from ECB Governing Council Member Gabriel Makhlouf.

EUR/USD News

Gold holds gains above $1,750 as US GDP hogs limelight

Gold holds gains above $1,750 as US GDP hogs limelight

Gold price is focusing on establishing above the critical resistance of $1,750.00 in the early Asian session after a solid recovery from $1,746.00 witnessed late Friday. Broadly, the precious metal is looking to recapture the three-and-a-half-month high at $1,786.54 amid a broader strength in market mood.

Gold News

Binance Coin: Two things need to happen for BNB to hit $450

Binance Coin: Two things need to happen for BNB to hit $450

Binance Coin price could be running out of gas to continue its massive rally. While the last five days have been exciting times for holders, the following days will need to be closely monitored. The threat of a downswing looms for BNB.

Read more

Week Ahead: Decisive week for the Dollar as PCE inflation and NFP reports coming up

Week Ahead: Decisive week for the Dollar as PCE inflation and NFP reports coming up

After the Thanksgiving downtime that generated some further weakness for the greenback, investors will be looking for fresh direction from the barrage of US economic data that will be dominating the agenda in the coming week.

Read more

Forex MAJORS

Cryptocurrencies

Signatures