- Gold Price refreshes intraday low while reversing the corrective pullback from yearly bottom.
- Sour sentiment underpins US dollar demand as yields signal economic slowdown after CPI rallied to 40-year high.
- US PPI, risk catalysts may entertain XAUUSD traders but bears keep reins amid inflation, recession woes.
Gold Price (XAUUSD) remains pressured below $1,730, reversing the previous day’s bounce off an 11-month low, as it refreshes an intraday low around $1,727 during Thursday’s Asian session. The metal’s weakness could be linked to the market’s fears of recession and higher interest rates, not to forget the US dollar's strength.
The precious metal recovered the previous day from the yearly low as markets struggled to digest the US inflation data amid mixed comments afterward. However, the hawkish Fedspeak and the Bank of Canada’s (BOC) 100 basis points (bps) rate hike cleared the way for the XAUUSD bears on Thursday.
Also read: Gold Price Forecast: Post-CPI recovery stalls below critical resistance
Golden bull bites the gold dust
Gold Price drown on yield curve inversion
The key US Treasury yield curve, mainly between the 2-year and 10-year Treasury coupons, remains inverted and portrays fears of recession, which in turn weigh on Gold Price. That said, the US 10-year Treasury yields rose four basis points (bps) to 2.95% at the latest while its 2-year counterpart rose to 3.18% by the press time. With this, the yield curve marks around 23 bps of inversion among the aforementioned key bond coupons and signals the market’s fears of economic slowdown.
Biden tried to tame US inflation fears but failed
US President Joe Biden cited energy prices to probe bears after the inflation data, per the US Consumer Price Index (CPI) for June, jumped to the highest level in 40 years to 9.1% YoY versus 8.8% expected and 8.6% prior. That said, the Core CPI, which excludes volatile food and energy prices, eased to 5.9% from 6% prior but crossed analysts' forecast of 5.8%. Following the US data, White House (WH) Economic Adviser Brian Deese told CNBC that the CPI data shows the urgency for Congress to pass legislation to spur semiconductor manufacturing in the US, as reported by Reuters. On the other hand, US President Biden mentioned that CPI data is ‘out of data’ as gas prices have fallen.
Bank of Canada also favors XAUUSD bears
The Bank of Canada (BOC) hiked its policy rate by 100 basis points (bps) to 2.5% in June, compared to the market expectation for a rate increase of 75 bps. “With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates”, said BOC Statement.
US Dollar Index drowns metal prices
US Dollar Index (DXY) justifies the four-decade high inflation figures while snapping a two-day downtrend, up 0.32% intraday near 108.40 by the press time, to weigh on the Gold Price. The greenback gauge’s latest run-up could also be linked to the fears of global economic slowdown and more pessimism surrounding Europe.
Hawkish Fedspeak favors bears
Fed policymakers recently favored the market’s hawkish bias while tracking the 40-year high US inflation data. Recently, San Francisco Federal Reserve Bank President Mary Daly said that her most likely posture is a 75bp hike in July but a 100bp is possible, as reported by the New York Times. Before that Richmond Federal Reserve President Thomas Barkin conveyed his support for higher rates in the last meeting while Cleveland Federal Reserve President Loretta Mester also said, “The data on CPI does not suggest a rate hike in July any smaller than that in June.”
Gold Price technical outlook
Gold Price pokes a late 2021 trough as it fails to extend corrective pullback from an upward sloping support line from March 2021. It’s worth noting, however, that the oversold RSI conditions challenge the XAUUSD bears.
That said, the $1,700 threshold can act as an additional downside filter, other than the aforementioned support line close to $1,709, to restrict short-term declines of the precious metal.
In a case where the XAUUSD bears keep reins past $1,700, the odds of witnessing a south-run towards the previous yearly low of $1,676 can’t be ruled out.
On the contrary, recovery moves need validation from the 78.6% Fibonacci retracement level of March 2021 to March 2022 upside, close to $1,760. Before that, the December 2021 low near $1,753 could restrict an immediate rebound.
Even if the quote rises past $1,760, gold buyers will seek validation from May’s low of $1,786 before retaking control.
Gold analysis forecast 11th to 15th July 2022
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 stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.