Gold Price Forecast: Bulls hesitate in a risk-on environment

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XAUUSD Current price: $1,799.3

  • July US inflation figures surprised positively as the CPI finally gave signs of having peaked.
  • The US Federal Reserve has room to ease its aggressive monetary tightening.
  • XAUUSD keeps posting higher highs on a daily basis but struggles to overcome $1,800.

Spot gold peaked on Wednesday at $1,807.86 a troy ounce but was unable to retain gains and retreated towards the $1,795 price zone. It is currently battling to overcome the $1,800 level amid the broad dollar’s weakness. The American currency collapsed after the release of the July Consumer Price Index, as the inflation rate contracted by more than anticipated, down to 8.5% YoY from 9.1% in June. More relevantly, the core reading held steady at 5.9%, better than the uptick towards 6.1% anticipated.

Stock markets soared with the news, with Wall Street holding on to substantial gains. Equities rallied on relief as easing US inflation should mean a less aggressive monetary tightening. Meanwhile, US government bond yields initially fell but quickly returned to pre-release levels, with the 10-year Treasury note currently yielding 2.76%.

Gold price short-term technical outlook

XAUUSD is up for a third consecutive day, posting higher highs and higher lows since the week started, which maintains the risk skewed to the upside. In the daily chart, technical indicators remain within positive levels, although the momentum seems limited. Nevertheless, the pair further advanced above a bullish 20 SMA, currently at $1,745.95.

Technical readings in the 4-hour chart favor another leg north, as a bullish 20 SMA keeps providing intraday support while advancing above the longer ones. Technical indicators, in the meantime, aim marginally higher within positive levels.

Support levels: 1,790.10 1,780.50 1,769.00  

Resistance levels: 1,803.10 1,816.60 1,825.15

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