Gold (XAU/USD) to Remain Above $1960 as the US Dollar Seems Weak

The Gold market has been able to break the key resistance level of $1960. The market can be said to be gaining strength due to the dollar’s weakness, and this performance is ahead of the release of the Consumer Price Index data of the United States of America, which should be released soon.

The Gold (XAU/USD) Market: From a Technical Perspective

Traders should brace themselves for very volatile price action in the Gold market ahead of the release of the inflation data for the United States of America. The market activity on the chart had formed a symmetrical triangle ahead of the price upside breakout. With the release of the US economic data, it is expected that the market will be in for more volatility as the volume of trade is expected to increase because of the release of the economic data.

Since June 8, the Relative Strength Index has reflected the market moving within the range of 40.00 to 55.00. The oscillatory market movement around the 50.00 mid-market level suggests that investors are a bit undecided as they await the release of important US economic data.

XAU/USD Market: From a Fundamental Perspective

Prior to the release of the US Consumer Price Index (CPI) data at 12:30 GMT, the gold price (XAU/USD) moved its auction over the key barrier of $1,960.00. Since investors are eagerly expecting the US inflation data to draw conclusions about the Federal Reserve’s (Fed) interest rate policy, the precious metal is predicted to exhibit erratic movements.

The prospects of the Fed making a neutral interest rate decision are very strong; therefore, S&P 500 futures are maintaining gains from the Asian session. The market mood is generally positive, and risk-sensitive assets are more appealing.

The US Dollar Index (DXY) is also showing signs of vulnerability as it nears its two-week low of around 103.20. Market investors are expecting that the energy component will continue to exert significant pressure on US inflation.

The energy component may have had a negative effect on the headline index, according to analysts at NBF, as prices for both gasoline and natural gas likely decreased. With regard to shelter, anticipated gains could still lead to a 0.2% monthly rise in prices. If we are correct, the yearly rate should decrease from 4.9% to a two-year low of 4.1%. The core index, on the other hand, might have increased by 0.3% on a monthly basis, which would equal a 5.1% yearly rise.

US Treasury yields are showing signs of pressure due to the likelihood of a neutral Fed policy increasing. The yield on US Treasury bonds with a 10-year maturity has decreased to just under 3.72%.

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