- The price of gold hits a new multi-month high after the release of US inflation figures.
- Crucial US CPI report consolidates expectations for lower Fed rate hikes, boosting XAU/USD.
- Risk appetite could curb bulls and limit the yellow metal’s gains.
The price of gold (XAU/USD) reverses a fall at the beginning of the American session to the area of $1,873 and jumps to a new eight-month high at $1,901 following the release of US consumer inflation figures. XAU/USD is currently sitting just below $1,900, up more than 1.0% on the day, and looks set to continue appreciating.
The dollar rebounded from a seven-month low in reaction to US Consumer Price Index (CPI) data, which in turn worked against the dollar-denominated gold price. The US Bureau of Labor Statistics reported that US headline CPI down 0.1% in December, compared to estimates from a flat reading. The annual rate, however, was in line with expectations and slowed to 6.3% from 7.1% in November. Besides, core inflation, which excludes food and energy prices, rose 0.3% in December and fell to 5.7% annually from 6.0% in November.
The mixed data, for its part, reaffirms the market’s expectations for a less aggressive tightening of monetary policy by the Federal Reserve (Fed) and keep US Treasury yields depressed. Indeed, the benchmark 10-year US Treasury yield is weakening near multi-week lows amid rising expectations for smaller Fed rate hikes ahead. This, in turn, limits the dollar recovery attempt and provides a new impetus to the gold price, which offers no returns. That being said, the generally positive tone in the equity markets could be the only factor limiting gains for the safe-haven XAU/USD.
However, the fundamental background continues to lean strongly in favor of the bulls. The positive outlook is bolstered by the appearance of some buying at lower levels in the last hour. This, in turn, supports the prospects for a further short-term move higher for the gold price, although it will be prudent to wait for sustained strength above the $1,900 level before opening any further bullish positions.
gold technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
