- US CPI data above expectations trigger volatility in financial markets.
- Gold falls and then rebounds, erasing losses.
- XAU/USD back above $1,830, still capped by the $1,835 area.
the price of gold they bounce sharply in a volatile session. Following the CPI data, XAU/USD fell to $1,821, hitting a two-day low. A few minutes later, it rallied above $1,830, approaching weekly highs. The bounce suggests some underlying strength, but it needs to consolidate above $1,835 to open the door for further gains.
The dollar rises and then falls
US economic data showed that the annual rate of the CPI rose to 7.5% in January, the highest level since 1982, and above the 7.3% expected. The numbers reinforced expectations of a Federal Reserve rate hike and buoyed the dollar across the board.
After the opening bell on Wall Street, the dollar reversed and erased all gains as stocks rose again as well. US yields trade at new monthly highs.
Buy the rumour, sell the fact patterns favored gold prices. XAU/USD is trading above $1,830. It still faces resistance at $1,835, and a break to the upside could see further gains and a move towards $1,850. If it fails to sustain above $1,830 on Thursday, then a corrective move seems likely. Initial support is seen at $1,820, followed by $1,815 and $1,808.
Technical levels
Source: Fx Street
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