- Gold price eases from monthly tops amid bets of earlier Fed rate hike.
- Treasury yields attempt a bounce amid upbeat mood, focus shifts to US PPI.
- Gold price faces rejection at 200-DMA, will it manage to recapture it?
Indeed, the US September inflation reading emerged as that key catalyst, which prompted a range breakout in gold price after the week-long consolidative mode. Gold price caught a fresh bid wave on Wednesday, after the US Consumer Price Index (CPI) rose by 5.4% YoY vs 5.3% expectations, reinforcing growing concerns over rising price pressures. Gold price rallied as much as $40 on the CPI release to reach four-week highs at $1796, as the US dollar witnessed a squeeze amid ‘sell the fact’ trading. Further, investors brought forward the Fed rate hike expectation, as they believed the central bank could raise rates sooner to fight the rising inflationary pressures. This triggered a sharp sell-off in the longer-dated Treasury yields, leading to flattening of the yield curve and adding to the strength in gold price.
However, gold price stalled it's upside and entered a consolidative mode on the FOMC September meeting’s minutes. The minutes revealed that the Fed officials are ready to begin tapering in November or December this year. Also, the upbeat tone on Wall Street indices stemmed the gold price rally.
In the aftermath of the US CPI-led surge, gold price has corrected slightly from monthly highs amid a renewed uptick in the Treasury yields while the dollar licks it’s wounds across its main competitors. Gold bulls now remain wary amid increasing calls for an earlier Fed rate hike. Meanwhile, the Asian stocks are trading firmer, tracking the Wall Street optimism, as they add to gold’s pullback. Traders look forward to a fresh batch of the US economic releases and Fedspeak for fresh trading opportunities in gold price while the Fed sentiment will continue to lead the way.
Gold Price Chart - Technical outlook
Gold: Daily chart
Tuesday’s closing above the short-term critical resistance of the 21-Daily Moving Average (DMA), at $1760 pointed to a turnaround towards a bullish sentiment in gold price.
The US CPI data delivered the much-needed impetus to traders, driving gold price past the downward-sloping 50-DMA at $1777, in order to test the all-important 200-DMA at $1797.
Going forward, any retracements will meet initial demand at the 50-DMA resistance-turned-support, below which the 21-DMA will come into play.
However, the 14-day Relative Strength Index (RSI) holds well above the 50.00 level, suggesting that any pullback will likely get bought into by the traders who feel that they have missed out on the recent rally.
On the topside, daily closing above the critical resistance around $1796-$1799 is needed to unleash additional upside in gold price. That price zone is the confluence of the bearish 100 and 200-DMAs.
The next relevant bullish target is envisioned near $1807-$1809, mid-September highs. If the latter gives way, then a fresh upswing towards the September highs of $1834 will be inevitable.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD bounces off lows, retests 1.1370
Following an early drop to the vicinity of 1.1310, EUR/USD now manages to regain pace and retargets the 1.1370-1.1380 band on the back of a tepid knee-jerk in the US Dollar, always amid growing optimism over a potential de-escalation in the US-China trade war.
GBP/USD trades slightly on the defensive in the low-1.3300s
GBP/USD remains under a mild selling pressure just above 1.3300 on Friday, despite firmer-than-expected UK Retail Sales. The pair is weighed down by a renewed buying interest in the Greenback, bolstered by fresh headlines suggesting a softening in the rhetoric surrounding the US-China trade conflict.
Gold remains offered below $3,300
Gold reversed Thursday’s rebound and slipped toward the $3,260 area per troy ounce at the end of the week in response to further improvement in the market sentiment, which was in turn underpinned by hopes of positive developments around the US-China trade crisis.
Ethereum: Accumulation addresses grab 1.11 million ETH as bullish momentum rises
Ethereum saw a 1% decline on Friday as sellers dominated exchange activity in the past 24 hours. Despite the recent selling, increased inflows into accumulation addresses and declining net taker volume show a gradual return of bullish momentum.
Week ahead: US GDP, inflation and jobs in focus amid tariff mess – BoJ meets
Barrage of US data to shed light on US economy as tariff war heats up. GDP, PCE inflation and nonfarm payrolls reports to headline the week. Bank of Japan to hold rates but may downgrade growth outlook. Eurozone and Australian CPI also on the agenda, Canadians go to the polls.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.