Update May 12: The XAU/USD pair fluctuated wildly in the early American session as investors assessed the latest inflation report from the US. After spiking to a daily high of $1,843, the pair reversed its direction and dropped to $1,820 area. The US Bureau of Labor Statistics reported that annual inflation, as measured by the Consumer Price Index (CPI), rose to 4.2% in April from 2.6% in March. Additionally, the Core CPI, which excludes volatile food and energy prices, climbed to 3% from 1.6%. Both of these figures came in higher than analysts’ estimates and triggered a rally in US Treasury bond yields. With the benchmark 10-year US T-bond yield gaining more than 3% on the day, the USD started to gather strength and weighed heavily on XAU/USD. As of writing, gold was down 0.83% on a daily basis at $1,822.
Gold Forecast for 12 May 2021: A big miss on US CPI to drive XAU/USD above 200-DMA? [Video]
Having failed to sustain above $1840 once again Gold price fell as low as $1818 on Tuesday before recovering losses to end the day marginally higher around $1837. The two-way price action kept investors on their toes. Gold prices dropped sharply after the US dollar rebounded from multi-month lows on the renewed risk-aversion wave, triggered by rising inflation concerns. Investors remain concerned about overheating of the US economy, as the Treasury yields recaptured the 1.60% level. Rising inflation expectations brought the Fed’s taper calls back on the table, which spooked the markets and triggered a sell-off on Wall Street. The US stocks slide, however, helped gold recover some shine.
Heading into the US CPI showdown this Wednesday, gold returns to the red zone, as the US dollar’s safe-haven demand remains in vogue amid an escalation of tensions between Israel and Gaza. Further, markets remain unnerved ahead of the US CPI April month report amid concerns of a potential acceleration in price pressures and its implication on the economy.
The US CPI is seen arriving at 0.2% MoM in April vs. March’s 0.6% while the core figure is seen steady at 0.3%. On an annualized basis, the CPI is likely to accelerate to 3.6% in the reported month vs. 2.6% previous. The 12-month core rate is seen higher at 2.3% vs. 1.6% last. A CPI disappointment could tame inflation fears and squash Fed’s tapering and tightening expectations, which is likely to trigger a renewed burst of demand for the gold price.
Gold forecast 2021 /05/12
On Tuesday, the yellow metal did not find support in the 55-hour simple moving average near 1,830.00. Instead, the price declined to the 1,818.20 level. The event confirmed that the 1,812.80/1,818.20 zone could provide support in the future.
During the early hours of Wednesday’s trading, the price was located in the middle between the 1,812.80/1,818.20 support…
Go to the news source: XAU/USD tests $1,820 as USD capitalizes on US CPI data