XAU/USD Could Be Susceptible to a Greater US CPI Print

Gold, XAU/USD, US CPI, Fed, Technical Evaluation – Speaking Factors:

• Gold costs traded flat on Monday as USD fell, Treasury charges rose
• All eyes are on US CPI, a higher-than-expected print could sink XAU
• The yellow metallic is eyeing a key zone of resistance, watch 200-SMA

Anti-fiat gold costs traded comparatively flat to begin off the buying and selling week, with XAU/USD struggling to increase a bounce that began final month. Throughout the Wall Road buying and selling session, buyers pushed the Dow Jones, S&P 500 and Nasdaq 100 to file highs forward of the second-quarter earnings season amid brewing optimism for rosy outcomes. This additionally lowered the demand for safer belongings, equivalent to Treasuries.

As such, bond yields traded increased and the US Greenback weakened. The previous tends to work in opposition to gold’s favor, whereas the latter typically advantages it. As such, provided that Treasury charges and the US Greenback traded in reverse instructions, it is smart that XAU/USD netted little modified. With that in thoughts, what’s the yellow metallic going to be watching over the remaining 24 hours?

All eyes are on June’s US CPI report. Headline shopper worth development is anticipated to clock in at 4.9% y/y, barely decrease from 5.0% increased. That will nonetheless be round 2008 highs. The core studying, which strips out risky meals and vitality costs, is anticipated to cross the wires at 4.0% y/y, versus 3.8% prior. This might be probably the most since 1991.

Such elevated worth pressures might deliver ahead sooner-than-anticipated Fed financial coverage tightening bets. Looking at Fed Fund Futures, the markets are pricing in about 80% likelihood of 1 price hike by the top of 2022. An consequence the place CPI surprises increased could push up bond yields and in addition profit the US Greenback. That will probably dent gold costs and vice versa.

Gold Technical Evaluation

Gold costs are idling slightly below the 1810 – 1818 resistance zone after costs bounced off lows from late June. A bullish crossover between the 20- and 50-period Easy Transferring Averages (SMAs) does provide a near-term upside bias. Having stated that, breaking above the important thing resistance zone would expose the 200-period SMA. This will reinstate the main focus decrease as destructive RSI divergence exhibits that upside momentum is fading.

XAU/USD 4-Hour Chart

Chart Created Utilizing TradingView

–— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter