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XAU / USD falls to the $ 1,760 zone as the dollar regains strength

  • Gold retains its bullish momentum ahead of the US session.
  • The 10-year US Treasury yield remains in negative territory.
  • The dollar struggles to find demand ahead of US inflation data.

Upgrade: Gold fell sharply at the beginning of the US session and regained its daily gains with the dollar regaining its equilibrium after September inflation data in the US The US Bureau of Labor Statistics announced Wednesday that the Index Core Consumer Price (CPI) was unchanged at 4% annually, while the CPI rose to 5.4% from 5.3% in August. Reflecting the renewed strength of the dollar, the US dollar index records small daily losses at 94.40. Meanwhile, the 10-year US Treasury yield is now in positive territory, rising 0.4% to 1,587% and putting additional weight on the shoulders of the XAU / USD pair.

The XAU / USD pair struggled to make a decisive move in either direction in the early days of the week, but managed to gain traction ahead of Wednesday’s US inflation data. Renewed USD weakness and falling US Treasury yields appear to be helping the pair rise. At time of writing, gold was up 0.7% on the day at $ 1,772.

In the absence of major data releases and fundamental developments, the observed positive shift in market sentiment is making it difficult for the dollar to find demand. With US equity futures rising 0.2% to 0.5%, the US dollar index is falling 0.25% on the day to 92.28 to mark widespread dollar weakness.

Meanwhile, the benchmark 10-year US Treasury yield, which fell 3.25% on Tuesday, remains in negative territory, providing an additional boost to XAU / USD.

Previewing Consumer Price Index (CPI) data, “markets are well aware that price increases are again playing a role in Fed policy, even if the rhetoric is muted.” said FXStreet senior analyst Joseph Trevisani. “Credit markets tell the story. As inflation rises, so should yields on Treasuries and the dollar.”

Gold technical outlook

On the four-hour chart, gold is currently trading above the two-week trading range and a daily close above $ 1,770 could open the door to additional gains. However, the Relative Strength Index (RSI) indicator on the same chart is approaching 70, suggesting that there could be a technical correction before the next leg up.

On the upside, the 200-period SMA acts as the first resistance at $ 1,775 before $ 1,787 (September 22 high) and $ 1,800 (psychological level).

Initial support is now at $ 1,770 (previous resistance) before $ 1,760 (50-period SMA) and $ 1,755 (100-period SMA).

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