Update: Gold quickly reversed the post-US CPI slide to the $1,870 area, or weekly lows and refreshed daily tops in the last hour, albeit lacked follow-through buying. The XAU/USD was last seen trading just below the $1,890 level, down nearly 0.15% for the day. Despite hotter-than-expected US consumer inflation figures, investors seem aligned with the Fed’s transitory narrative and that pricing pressures will abate later in the year. This, in turn, prompted some fresh selling around the US dollar and provided a goodish lift to dollar-denominated commodities, including gold.
Meanwhile, the US fixed income market reacted to stronger data and pushed the yield on the benchmark 10-year US government bond back above the 1.50% threshold. This was seen as a key factor that kept a lid on any further gains for the non-yielding yellow metal. Apart from this, the underlying bullish sentiment in the financial markets – as depicted by a generally positive tone in the equity markets – acted as a headwind for traditional safe-haven assets and capped the upside for gold. This makes it prudent to wait for some follow-through selling before traders again start positioning for the resumption of the recent appreciating move.
Previous update: Gold price is attempting a minor bounce, having witnessed a steep drop following a break below the critical 21-DMA support at 1883. At the time of writing, gold price is trading 0.50% lower at $1880, looking to recapture the 21-DMA. The US dollar is gaining additional strength amid an uptick in the Treasury yields and anxiety ahead of the US inflation data. Investors resort to repositioning ahead of the ECB announcement and US CPI release. These key events will shed light on the pace of global recovery and policymakers’ thinking about paring back stimulus, which will have a significant impact on the dollar trades and eventually on gold price.
Gold (XAU/USD) prices remain pressured during a three-day downtrend of around $1,883, down 0.26% on a day, ahead of the Super Thursday’s European session. In doing so, the quote fades earlier bounce off the day’s bottom of $1,885.16 as traders await the key US Consumer Price Index (CPI) and the European Central Bank (ECB) outcomes.
Inflation is a severe concern than ECB…
A seven-week low of US inflation expectations keeps market players hopeful that the Fed can term the US CPI temporary risk should it matches the firmer forecasts. Though, early signals of the inflation, comprising the Retail Sales, Core PCE and GDP, not to forget buying spree due to the economic unlock, say another story for the next week’s FOMC meeting. As a result, a YoY CPI print near 3.4% and/or a 4.7% Core CPI shouldn’t make a strong bearish case for gold but anything beyond that will be crucial.
An otherwise market mover, the ECB meeting, is likely to…
Go to the news source: XAU/USD reverses post-US CPI dip to weekly lows, lacks follow-through