- Gold prices advanced strongly following the release of a soft US Consumer Price Index in October.
- The US dollar extends its weekly losses and falls 3.31%.
- Federal Reserve officials have agreed to slow the pace of rate hikes and have made it clear that they are not easing policy.
the price of gold advances strongly in the North American session, holding on to Thursday’s gains. Factors such as a softer US Consumer Price Index (CPI) report and China’s easing of some Covid-19 restrictions were applauded by investors, as US stock futures show. US trading higher. At the time of writing, XAUUSD is trading at $1,761, above its opening price, after reaching a daily low of $1,747.
Gold Gains on Less Aggressive Fed Speculation Raised
US stocks are poised for a higher open, as the futures market shows. Crypto turmoil keeps the Nasdaq under pressure as FTX began the Chapter 11 process, but an upbeat report on US inflation fueled speculation of a less aggressive Fed. The October inflation report in the US showed that headline and core CPI, although above the Fed’s target, declined compared to last month’s figures. US CPI rose 7.7% yoy, below estimates of 7.9%, and core CPI, which excludes volatile items and bucks the CPI’s downward trend, fell to 6.3% yoy, below 6.5 % expected.
Gold reacted positively to the report and ended Thursday’s session at $1,757, up 2.86%. By contrast, US Treasury bond yields slumped, with the 10-year US Treasury yield falling 28 basis points, closing at 3,829%. It should be noted that the US bond market will remain closed on Friday for the celebration of Veteran’s Day.
Following the release of the data, several Federal Reserve officials commented that it was “appropriate” to slow the pace of interest rate hikes. However, most of them commented that the Fed is still tightening monetary policy, with Dallas Fed President Lorie Logan saying “a slower pace should not be taken as easier policy.”
Meanwhile, CME’s FedWatch tool shows that investors expect the Fed to hike rates by 50 basis points at its December meeting as the odds stand at 85.4%, unchanged from Thursday.
Crossing the news wires lately, US Treasury Secretary and former Federal Reserve Chair Janet Yellen said the October inflation reading was positive. However, she warned that the core CPI was lower, but house prices remain high.
On the US calendar, at 15:00 GMT, the Consumer Sentiment of the University of Michigan (UoM) will be known, which will stand at 59.5, and inflation expectations will be updated.
Gold Price Analysis: Technical Outlook
XAUUSD is testing the daily high of August 25 at $1765.48. After hitting a daily high of $1,766.62, the yellow metal slipped below the latter, with gold holding above Thursday’s high of $1,757.26. It is worth noting that the Relative Strength Index (RSI), in bullish territory, suggests that there will be more rises. However, as traders prepare for the weekend, XAUUSD could consolidate in the $1,757-$1,766 range.
The first resistance level for XAUUSD would be $1,765.48. Breaking above will expose the $1,800 figure, followed by the 200-day EMA. To the downside, the first support for XAUUSD would be Thursday’s high of $1,757.26, followed by the psychological level of $1,750 and the August 22 low of $1,727.80.
Source: Fx Street
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