Gold prices (XAU/USD) showcased a strong rebound, breaching the two-week high mark despite recent market volatility triggered by the US Consumer Price Index (CPI) data and a strengthening US Dollar. The precious metal witnessed an intraday turnaround, climbing to the $1,885 region before settling near the lower end of its daily range. The surge was attributed to a retreat in US Treasury bond yields and an easing of the Greenback’s momentum, although concerns persist regarding the Federal Reserve’s potential rate hikes.
Recent dovish remarks from multiple Fed officials hint at a potential stall in the US central bank’s tightening policy, calming nerves around climbing bond yields. Geopolitical tensions, notably the ongoing Israel-Palestine conflict, also contributed to increased safe-haven demand, further propelling gold prices upwards during the European session.
Market participants are eagerly awaiting the Preliminary Michigan US Consumer Confidence Index, along with a speech by Philadelphia Fed President Patrick Harker, to gauge the short-term trajectory of the US Dollar and potential trading opportunities surrounding gold prices.
The latest market data underlines a tumultuous economic landscape. While the US CPI rose 0.4% in September, the yearly rate held steady at 3.7%, suggesting persistent inflation concerns. Core CPI figures, excluding volatile food and energy prices, also registered a 24-month low at 4.1% year-on-year in September. The consistent inflationary pressure, coupled with uncertainties surrounding the Fed’s next moves, continues to challenge gold bulls, warranting cautious market sentiment.
From a technical perspective, gold prices are expected to aim for the pivotal $1,900 mark, provided they can surpass the immediate resistance at the $1,885 region. On the downside, the $1,868-$1,865 support zone remains crucial, with a break below potentially exposing the precious metal to further downside risks.
Despite the fluctuations, gold is on track to record significant weekly gains of over 3.5%, marking its strongest performance since mid-March and snapping a two-week losing streak. As market volatility persists, investors remain on high alert, closely monitoring any developments that could sway gold’s fortunes in the coming days.