Gold Price Forecast: Post-CPI recovery stalls below critical resistance

XAUUSD Current price: $1,738.35

• US inflation jumped to a fresh multi-decade high of 9.1% YoY in June.
• Wall Street fights back and trims most of its early losses.
• XAUUSD is aiming to correct higher but is still far from turning bullish.

Gold Price has bounced sharply from a fresh 2022 low of $1,706.88 a troy ounce and currently trades at around $1,738.00. The dollar soared following the release of the US Consumer Price Index, which jumped by 9.1% YoY in June, surpassing the 8.8% rise expected. The higher-than-anticipated figure spurred risk aversion as investors rushed to price in a more aggressive monetary tightening by the Fed.

Financial markets were pricing in a US Federal Reserve rate hike of 75 bps ahead of the event, but higher-than-anticipated figures have put a 100 bps movement on the table. On the other hand, the chances of a 50 bps hike have decreased to 25%.

Global equities plummeted with the news and US indexes opened with substantial losses, while US government bond yields soared, reflecting fears of a US recession. However, Wall Street changed course after the opening and trimmed most of its early losses, putting pressure on the greenback and sending XAUUSD to as high as $1,745.33.

Gold Price short-term technical outlook

The daily chart for the XAUUSD pair shows that technical indicators have lost their bearish steam, turning marginally lower within oversold readings. At the same time, Gold Price continues to develop below firmly bearish moving averages. As a reference, the 20 SMA is currently at around $1,975.90, reflecting sellers’ strength in the last few days.

The 4-hour chart shows that XAUUSD surpasses its 20 SMA while remaining below the longer ones. Meanwhile, technical indicators head firmly higher, with the Momentum around its 100 level and the RSI still below its midline, falling short of confirming a bullish extension in the near term. Gold will have better chances on a break above $1,752.50, an immediate static resistance level.

Support levels:  1,720.30 1,706.90 1,695.90

Resistance levels:  1,752.50 1,763.90  1,772.45

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