- Markets on standby ahead of US inflation data.
- Gold falls to $1788 and bounces back.
- On Tuesday the yellow metal hit $1,800 and then reversed direction.
The Prayed is trading neutral around $1792, awaiting US July inflation figures. XAUUSD extended the pullback from Tuesday’s high of $1800 to $1787, then bounced back.
So far on Wednesday, both gold and most financial assets are trading in small ranges. Volatility remains low. This is expected to change in the coming hours with the publication of the US inflation data.
At 12:30 GMT the evolution of the Consumer Price Index (CPI) for July in the United States will be known. The market consensus is for a monthly rise of 0.2% and for the annual rate to go from 9.1% to 8.7%. For its part, the core ICP is estimated to have risen 0.5%, which would take the annual rate from 5.9% to 6.1%.
Higher-than-expected data, which contribute to generating expectations of a more aggressive Federal Reserve, would be positive for the dollar and could put downward pressure on gold. Conversely, a significant drop in inflation could push Treasury yields lower, favoring gold.
In recent days, the decline in inflation expectations reflected in surveys, favored the rally in gold. The yellow metal rallies ahead of strong resistance at $1800 and then at $1805. If it overcomes them, it would gain support, reinforcing the recovery scenario. On the downside, supports are seen at $1,785, followed by $1,770.
Technical levels
Source: Fx Street
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