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XAUUSD holds above 50 DMA as weaker USD offsets yields rebound


9 August 2022

Gold Price trades listlessly amid investors' caution ahead of US inflation. The US dollar weakness offsets the rebound in Treasury yields. XAUUSD bulls remain hopeful so long as the 50 DMA holds fort. Gold Price is lacking a clear directional bias while hovering below the $1,800 mark, with bulls struggling to gain a footing amid a cautious market mood.

Investors refrain from placing any big positional bet on the yellow metal ahead of the all-important US inflation data due this Wednesday. Last Friday’s bumper US employment data stoked up 75 bps Fed rate hike expectations for September, triggering a sharp sell-off in the non-interest-bearing gold.

Therefore, the US Consumer Price Index (CPI) data remains extremely critical for the Fed to decide on the size of the next rate lift-off, eventually shaping up the next direction for the bullion. The annualized US Consumer Price Index (CPI) for July is expected to show inflation to have eased to 8.7% from 9.1% in June. The expectations of a softer inflation reading are weighing negatively on the US dollar while keeping the sentiment around the metal buoyed.

The upside in the bright metal, however, appears capped, as the US Treasury yields stage a decent comeback even though risk sentiment remains in a weaker spot in Tuesday’s European trading. Looking forward, the broader market sentiment and the dynamics of the dollar will continue impacting the precious metal, in absence of top-tier US economic data due for release later on Tuesday.

Gold price: daily chart

Gold price: daily chart

Technically, nothing seems to have changed for the bullion even though it recaptured the critical downward-sloping 50-Daily Moving Average (DMA), now at $1,787. A failure to sustain above the latter will open up a renewed downside towards the previous day’s low of $1,771, below which the $1,765 demand area will come into play.

The risk appears skewed to the downside as the 100 DMA is probing the 200 DMA for a break lower, which if materializes could confirm a bear cross.

But the 14-day Relative Strength Index (RSI) remains above the midline, keeping XAU bullish interests still underpinned. Buyers need acceptance above the $1,800 mark to continue with its recovery momentum. 

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