- Gold price reverses a modest intraday dip, though the upside remains capped.
- The US Dollar struggles to preserve its gains and lends support to the XAU/USD.
- Traders keenly await the US CPI report and key central bank event risks this week.
Gold price attracts some dip-buying near the $1,954 region on the first day of a new week and climbs to the top end of its daily trading range during the early European session. The XAU/USD currently trades around the $1,960 level, nearly unchanged for the day, and for now, seems to have stalled its retracement slide from a one-week high touched on Friday.
Despite a modest uptick in the US Treasury bond yields, the US Dollar (USD) struggles to preserve its modest intraday gains and turns out to be a key factor lending some support to Gold price. The downside for the USD, however, seems cushioned, at least for the time being, as traders seem reluctant in the wake of the uncertainty over the Federal Reserve's (Fed) rate hike path. It is worth recalling that a slew of Fed officials recently fueled speculations about an imminent pause in the central bank's year-long policy tightening cycle. That said, the markets are still pricing in the possibility of another 25 bps lift-off at the next Federal Open Market Committee (FOMC) policy meeting in July.
The bets were lifted following surprise rate hikes by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week, which suggested that the fight against inflation is not over yet. This, in turn, might hold back traders from placing aggressive bullish bets around Gold price ahead of this week's release of the latest consumer inflation figures from the United States (US), due on Tuesday. A stronger US Consumer Price Index (CPI) will support prospects for further policy tightening by the Fed, which is scheduled to announce its policy decision at the end of the highly-anticipated two-day meeting on Wednesday, and should provide a fresh impetus to the XAU/USD.
In the meantime, firming expectations for additional interest rate hikes by the European Central Bank (ECB), due to announce its decision on Thursday, and the Bank of England (BoE) might contribute to capping the non-yielding Gold price. Investors this week will further take cues from the Bank of Japan (BoJ) meeting on Friday. This makes it prudent to wait for strong follow-through buying before positioning for an extension of the recent bounce from the 100-day Simple Moving Average (SMA) support, currently near the $1,941 area, held over the past two weeks or so.
Technical levels to watch
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