Gold Price follows wild moves in the Treasury market.US CPI rises above expectations in June, PPI data on Thursday.
Stocks decline but trim losses, caution tone prevails among market participants.
Gold Price (XAUUSD) bounced sharply during the last hours and turned positive for the day. The metal bottomed at $1,706 following US inflation data and then rebounded, rising $40 in a few minutes. It peaked at $1,745, the highest level in three days. Volatility in prices is set to remain elevated on the back of market concerns and wild moves in the Treasury market.
Gold Price not out of the woods yet
Stocks in Wall Street are falling, but are off lows. In money markets, prices reflect inflation as the main concern for Federal Reserve officials in the short-term and a growth crisis later as the main issue. While in the short-term bets for more aggressive rate hikes are rising, prices reflect odds of rate cuts for 2023.
Gold Price initially reacted to a stronger US dollar and higher US yields, falling toward $1,700. When the price looked ready for a slide below to approach the 2021 bottom near $1,675, everything changed. The US 10-year yield fell from 3.07% to 2.90% and the 30-year rate from 3.22% to 3.08%. The US Dollar Index (DXY) hit a multi-year high at 108.58 and dropped to 107.50. The yellow metal bounced sharply, alleviating the bearish pressure.
Gold Price shows some not-so-negative signs.Gold Price rose back above $1,730 and also above the 20 Simple Moving Average in the four-hour chart, currently at $1,735. While above, XAUUSD could hold a positive momentum in the very short term. The key resistance ahead is $1,750. Above, gold could extend the recovery.
The spike to $1,706 followed by the rebound is a potential reversal that could anticipate further gains, particularly if it breaks above $1,750. A failure to do so could keep XAUUSD between $1,750 and $1,730.
Despite signs of some consolidation in the short-term, the main trend in Gold Price is bearish. A slide below $1,720 should expose again $1,700. Below the round number, there is not much support until the area of the 2021 lows of $1,650.
EUR/USD has gathered bullish momentum and advanced beyond 1.0100 before retreating modestly in the American session. Wall Street’s main indexes trade in negative territory following an earlier rebound, limiting EUR/USD’s upside for the time being.
USD/CAD trades deep in red below 1.3000 during BOC presser
USD/CAD fell sharply with the initial reaction to the Bank of Canada’s decision to hike its policy rate by 100 basis points to 2.5%. Although the pair edged slightly higher during Governor Macklem’s press conference, it remains on track to post daily losses below 1.3000.
Gold is aiming to correct higher
Gold has bounced sharply from a fresh 2022 low and currently trades at around $1,738.00. The dollar soared following the release of the US CPI, which jumped by 9.1% YoY in June, surpassing the 8.8% rise expected. The higher-than-anticipated figure spurred risk aversion as investors rushed to price in a more aggressive monetary tightening by the Fed.