- Gold price has declined to near $1,670.00 marginally, downside seems restricted amid upbeat risk profile.
- Trimmed chances of the Fed’s fifth consecutive 75 bps rate hike could weigh on US Treasury yields.
- The absence of exhaustion signs in core CPI could bring volatility in the global market.
Gold price (XAUUSD) has corrected to near $1,670.00 in the Asian session after failing to sustain above the critical hurdle of $1,680.00. The precious metal has sensed a light selling pressure as the juggernaut gold rally has met with a long liquidation program. The upside potential in the gold price is still solid as the overall market sentiment is extremely cheerful.
Meanwhile, the US dollar index (DXY) is holding its Tokyo gains and is displaying a rangebound structure above 111.00. The 10-year US Treasury yields have suffered a minor decline to nearly 4.15% as the chances of 75 basis points (bps) rate hike by the Federal Reserve (Fed) have trimmed. As per the CME FedWatch tool, the odds favoring a continuation of a bigger rate hike stand at 38.5%.
After the robust payroll data by the US agency, investors are awaiting the release of the Consumer Price Index (CPI) data. As per the preliminary estimates, the headline CPI is seen lower at 8.0% vs. the prior release of 8.2%. While the core CPI that excludes oil and food prices is seen lower at 6.5% against 6.6% recorded earlier.
It is worth noting that the core inflation rate has not displayed signs of serious exhaustion yet, therefore, no meaningful change in core CPI numbers could trigger volatility in the markets.
Gold technical analysis
Gold price has witnessed a stellar buying response after testing the demand zone placed in a narrow range of $1,615.70-1,618.64 on a four-hour scale. The 200-period Exponential Moving Average (EMA) at $1,664.20 acted as a barricade earlier but will not act as support ahead.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted to the bullish range of 60.00-80.00, which indicates the upside momentum has been triggered.
Gold four-hour chart
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