- Gold price drifts lower for the second straight day and struggles near the monthly low.
- The emergence of some US Dollar buying drives flows away from the precious metal.
- Looming recession risks help limit losses for the XAU/USD ahead of the US CPI print.
Gold price remains under some selling pressure for the second successive day on Wednesday and languishes near the monthly low touched the previous day. The XAU/USD trades around the $1,910 level during the Asian session and seems poised to prolong the recent downfall from the $1,953 region, or a one-month peak, around set on September 1.
The US Dollar (USD) attracts fresh buying following Tuesday's good two-way price swings and is seen as a key factor undermining demand for the Gold price. Expectations that the Federal Reserve (Fed) will stick to its hawkish stance remain supportive of elevated US Treasury bond yields and continue to act as a tailwind for the Greenback. Market participants seem convinced that the Fed will keep interest rates higher for longer and have been pricing in the possibility of one more 25 basis points (bps) lift-off by the end of this year.
The bets were reaffirmed by the upbeat US macro data released last week, which pointed to a resilient economy. Furthermore, the fact, that inflation is not cooling fast enough supports prospects for further policy tightening by the Fed. Hence, the market focus remains glued to the US consumer inflation figures, due later during the early North American session. The crucial US Consumer Price Index (CPI) will influence expectations about the Fed's future rate-hike path and provide a fresh directional impetus to the non-yielding Gold price.
Any signs of sticky inflation might set the stage for the resumption of the USD's recent rally to a six-month peak and pave the way for a further depreciating move for the Gold price. That said, a generally softer risk tone might hold back bears from placing fresh bets around the safe-haven XAU/USD. The market sentiment remains fragile in the wake of concerns about the worsening economic conditions in China. Adding to this, worries about headwinds stemming from rapidly rising borrowing costs temper investors' appetite for riskier assets.
Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favour of bearish traders and suggests that the path of least resistance for the Gold price is to the downside. Moreover, the overnight breakdown and close below a technically significant 200-day Simple Moving Average (SMA) validate the negative outlook for the XAU/USD. Hence, any positive reaction to the US macro data might still be seen as a selling opportunity and run the risk of fizzling out rather quickly.
Technical levels to watch
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 recovers toward 1.0850 as risk mood improves
EUR/USD gains traction and rises toward 1.0850 on Friday. The improvement seen in risk mood makes it difficult for the US Dollar (USD) to preserve its strength and helps the pair erase a portion of its weekly losses.
GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip
GBP/USD staged a rebound and stabilized above 1.2700 after dropping to a weekly low below 1.2680 in the early European session in response to the disappointing UK Retail Sales data. The USD struggles to find demand on upbeat risk mood and allows the pair to hold its ground.
Gold rebounds to $2,340 area, stays deep in red for the week
Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.
Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind
Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.
Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight
Dollar traders lock gaze on core PCE index. Eurozone CPIs in focus as June cut looms. Tokyo CPIs may complicate BoJ’s policy plans. Aussie awaits Australian CPIs and Chinese PMIs.