Amid a cautious trading atmosphere, Gold price (XAU/USD) retains a modest hold above the $1,870 mark, showcasing a lack of strong bullish momentum. Despite an initial rebound from the recent two-week high of $1,885, the precious metal’s upward momentum appears to have stalled in the Asian session on Friday.
The US Dollar’s recent pause, following a robust rally triggered by the higher-than-anticipated US consumer inflation figures, coupled with a slight decline in US Treasury bond yields, has provided some support to gold. However, the ongoing geopolitical tensions between Israel and Hamas, along with mounting expectations for another Federal Reserve (Fed) rate hike in 2023, have constrained any significant upward movement for the yellow metal.
Market data from the US Bureau of Labor Statistics revealed that while the headline US CPI rose by 0.4% in September, the annual rate remained stable at 3.7%, surpassing the estimated decline to 3.6%. Similarly, the Core CPI, excluding volatile food and energy prices, aligned with projections, dropping to a 24-month low at 4.1% year-on-year in September. The persistence of inflation above the Fed’s 2% target continues to bolster the case for further tightening by the US central bank.
Amidst this mixed outlook, investors are urged to exercise caution before entering new bullish positions. While some dovish comments from Fed officials suggest a potential pause in the rate-hiking cycle, the broader economic context still hints at potential tailwinds for US bond yields and the US Dollar.
As traders await the preliminary Michigan Consumer Sentiment Index during the early North American session, the focus remains on how the market dynamics will play out in the coming sessions. Although the Gold price is on track to record substantial weekly gains for the first time in the past three weeks, the uncertain market conditions call for a vigilant approach to trading.