Gold Value Estimate: As traders await Wednesday’s US CPI, XAU/USD lacks firm direction.

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The price of gold remains above the 200-day moving average and trades with a positive bias for the second consecutive day.

Repressed US Dollar cost activity and approaching downturn gambles with offer a help to the XAU/USD.

The potential gain appears to be restricted in front of the US CPI on Wednesday and Thursday’s ECB strategy meeting.

During the Asian session on Tuesday, dip-buying in the vicinity of the crucial 200-day Simple Moving Average (SMA) support halts the overnight pullback from the $1,930 area—a four-day high—for the gold price. While traders eagerly await the release of the most recent consumer inflation figures from the United States (US) on Wednesday, the XAU/USD is currently trading around the $1,923 area, up slightly for the second day in a row. However, the pair lacks bullish conviction.

The vital US Customer Value Record (CPI) will give new signs about the Central bank’s (Took care of) future rate climb way after the generally expected stop in September. A more grounded US CPI print will reaffirm market wagers for additional strategy fixing by the Fed, which, thusly, will put the stage for a new leg down for the non-yielding Gold cost. It’s important to note that the markets have been pricing in the possibility of one more 25 bps lift-off before the end of the year.

The assumptions were lifted by the energetic US large scale information delivered last week, which highlighted a versatile economy and ought to permit the Fed to keep financing costs higher for longer. The US dollar (USD) had reached a six-month high last week as a result of the hawkish outlook, which is still in favor of higher yields on US Treasury bonds. The Greenback, nonetheless, saw some benefit taking on Monday and mulled close to a multi-day low on Tuesday, loaning a help to the Gold cost.

Another factor that contributes to the precious metal’s status as a safe haven is the generally cautious atmosphere in the equity markets. Market members stay worried about the deteriorating financial circumstances in China – the world’s second-biggest economy. This, alongside stresses over headwinds originating from quickly rising getting costs, tempers financial backers’ hunger for more dangerous resources and drives some shelter streams towards the Gold cost.

However, prior to the US CPI report, traders appear reluctant to make risky bets in the direction of the bulls. Together with the much-anticipated meeting of the European Central Bank (ECB) on Thursday, this ought to give the price of gold a new push. Analysts are still divided on whether the ECB will raise interest rates for the tenth time in a row in the face of inflation that is still high or whether it will stop its historic policy-tightening cycle in the face of a worsening economic outlook for the Euro Zone.

Investors will be able to determine the next leg of a directional move for the Gold price with the assistance of the key data/central bank event risk. Before positioning for the resumption of the recent recovery from the $1,885 region, or over a five-month trough touched in August, it is prudent to wait for strong follow-through buying.


About the author

Nafees Saifi // entrepreneur, author, trainer, and stocks and FX trader. 
Nafees Saifi is a professional FX trader from, India. Nafees has extensive experience trading commodities, bonds, and equity futures in the Asian, European, and US markets. Nafees holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.


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