- The gold price fails to take advantage of its intraday advance after hitting a new multi-month high.
- The modest strength of the US dollar and the positive tone of risk work against the yellow metal.
- Expectations for lower Fed rate hikes help limit losses as attention turns to US CPI report.
The price of gold (XAU/USD) It retraces its modest intraday gains after reaching a new eight-month high around the $1,886-$1,887 area touched earlier this Wednesday and turns neutral at the start of the American session. currently located just above the $1,875 levelthe fall in XAU/USD remains supported amid expectations of a less aggressive tightening of monetary policy by the Federal Reserve (Fed).
Expectations for a less aggressive Federal Reserve support the price of gold
The mixed US jobs report released on Friday showed a slowdown in wage growth and pointed to a decrease in inflationary pressures. In addition, business activity in the US services sector reached its worst level since 2009, suggesting that the effect of the Fed’s big rate hikes in 2022 is being felt in the economy. This, in turn, raised expectations for lower Fed rate hikes Going forward, this is keeping US Treasury yields under pressure near multi-week lows and could continue to support the non-yielding gold price.
The moderate strength of the dollar and the positive tone of risk limit the price of gold
Having said that, a modest rebound in the US dollar (USD) is holding back bulls from opening aggressive positions. A stronger dollar tends to act as a headwind for the price of gold, denominated in US dollars. In addition, the generally positive tone of the stock markets helps to limit the rise of the precious metal, at least for the moment. Traders are also looking reluctant, preferring to stay on the sidelines ahead of the release of the latest CPI consumer inflation figures from the United States (US), due on Thursday.
Attention remains focused on US consumer inflation numbers
The crucial US CPI report will play a key role in influencing the path of the Federal Reserve’s rate hikes and boosting the price of gold in the near term. Policy makers have indicated that they continue to committed to the fight against high inflation and that rates could remain elevated for longer, or until there is clear evidence that consumer prices are falling. Therefore, if the US CPI is stronger, expectations of a more hawkish Fed will rise and XAU/USD will fall again.
Ahead of the key data, falling US bond yields could act as a headwind for the dollar in the absence of any relevant US economic releases that could affect the market. This could continue to support the price of gold. Apart from this, traders could follow the broader risk sentiment to take advantage of some short-term opportunities around XAU/USD.
Gold Price Technical Outlook
From a technical point of view, any significant corrective decline is likely to find good support near the breakout point of resistance between $1,865 and $1,860. A sustained break below this region could trigger some technical selling and drag gold price down to the horizontal support at $1,835-$1,833. Secondly, the next resistance level is near $1,900. Sustained strength above this level will be seen as a new trigger for the bulls and will pave the way for an extension of the move higher in the near term.
gold key 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.
