Gold Price Forecast: XAU/USD approaches $1,800 on rising US inflation

  • XAU/USD rallies above $1,780 on a higher than expected US CPI reading.
  • Fed policymakers across the wires agreed to begin the bond taper by the FOMC November meeting.
  • Silver rises in tandem with gold, almost 3% in the day.

Gold (XAU/USD) surges during the New York session, trading at $1,793, up almost 1.86% at the time of writing. Factors like the August US higher inflation reading with its Core component, rising 0.2% (MoM), the ongoing energy crunch in Europe and Asia, and falling US 10-year Treasury yield boosts the non-yielding metal.

Furthermore, on Tuesday, Federal Reserve members, across the wires, expressed that they would like to start the QE’s reduction by the November meeting, propelling investors towards safe-haven assets like gold and silver (XAG/USD), which is advancing almost 3%, around $23.20.

The market sentiment is mixed as depicted by European equity indexes rise between 0.12% and  0.55%, while across the pond, more significant stock indices fall between 0.21% and 0.48%, except for the tech-heavy Nasdaq Composite, which is rising 0.42%.

The US Dollar Index that tracks the greenback’s performance against a basket of peers is down 0.28%, sits at 94.25, underpinned by the slump in the US T-bond 10-year benchmark note rate slumping four basis points to sit at 1.533%, lifting the prospects of higher yellow-metal prices.

US Consumer Price Index rose above 5.4%, a tick higher than expected

Data-wise, the US Bureau of Labor Statistics (BLS) released inflationary numbers for August. The Consumer Price Index increased by 5.4%, higher than the 5.3%, whereas the Core Consumer Price Index, which excludes food and energy prices, remained unchanged at 4%, both readings on an annual basis.

Later on, the Federal Reserve will unveil the last FOMC meeting minutes at 18:00 GMT.

XAU/USD Price Forecast: Technical outlook

Daily chart

Gold (XAU/USD) tests the 200-day moving average (DMA) at around $1,799. A daily close above the latter would change the downward bias in the non-yielding metal, as the 200-DMA is the barometer of a long-term trade in the financial markets. But, besides the 200-DMA, the 100-DMA and a downward slope trendline could exert intense selling pressure around the $1,795 – $1,805 area. 

For XAU/USD buyers, a daily close above that zone could pave the way for further gains. The first supply level would be the September 3 high at $1,833. A breach above that level could expose the June 11 high at $1,902.

Momentum indicators like the Relative Strength Index (RSI) is at 59, is aiming aggressively to the upside, suggesting that gold is under intense buying pressure as it remains below oversold levels.



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