|

Gold Price Forecast: XAU/USD retreats from post-US CPI swing high, back below $1,800 mark

  • Gold catches aggressive bids in the last hour and jumps to a fresh multi-week high.
  • The post-US CPI broad-based USD sell-off provides a goodish lift to the commodity.
  • Diminishing odds for a larger Fed rate hike in September further benefits the metal.
  • The risk-on impulse caps the safe-haven XAU/USD and warrants caution for bulls.

Gold turns positive for the third successive day on Wednesday and jumps to a fresh six-week high, around the $1,808 region during the early North American session.

The US dollar weakens across the board, plunging to its lowest level since July 4 in reaction to softer US consumer inflation figures. This turns out to be a key factor pushing the dollar-denominated gold higher for the third successive day on Wednesday. The Bureau of Labour Statistics reported that the headline US CPI remained flat in July against expectations for a modest 0.2% rise and 1.3% in the previous month.

Adding to this, the yearly rate decelerated more than anticipated, to 8.5% in July from the 9.1% previous. Furthermore, the core CPI, which excludes volatile food and energy prices, held steady at 5.9% YoY, missing the forecast for a 6.1% increase. The data suggests that US inflation might have already peaked and pushed back expectations for an aggressive tightening by the Fed, which, in turn, weighs heavily on the USD.

In fact, the odds for a 75 bps Fed Rate hike move in September tumble to just 35 from 80% pre-CPI. This triggers a steep decline in the US Treasury bond yields, which further contributes to driving flows towards the non-yielding yellow metal. The strong move up, meanwhile, lifts spot prices beyond the $1,800 mark, though a massive rally in the US equity futures keeps a lid on any further gains for the safe-haven gold.

The XAU/USD now retreats below the $1,800 pivotal point, warranting some caution for bullish traders and positioning for any further appreciating move. That said, any meaningful pullback might still be seen as a buying opportunity and remain limited amid worries about a global economic downturn and US-China tensions over Taiwan.

Technical levels to watch

XAU/USD

Overview
Today last price1797.44
Today Daily Change3.23
Today Daily Change %0.18
Today daily open1794.21
 
Trends
Daily SMA201742.96
Daily SMA501786.78
Daily SMA1001842.1
Daily SMA2001841.93
 
Levels
Previous Daily High1800.46
Previous Daily Low1783.3
Previous Weekly High1794.97
Previous Weekly Low1754.35
Previous Monthly High1814.37
Previous Monthly Low1680.91
Daily Fibonacci 38.2%1793.9
Daily Fibonacci 61.8%1789.86
Daily Pivot Point S11784.85
Daily Pivot Point S21775.5
Daily Pivot Point S31767.69
Daily Pivot Point R11802.01
Daily Pivot Point R21809.82
Daily Pivot Point R31819.17

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?
The Euro is not the sick man of Europe. France's bond market is
EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.
Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?