- Gold price is sitting at fresh monthly highs near $1,960 on Thursday.
- The US Dollar pain deepens with US Treasury bond yields’ as soft US CPI reinforces dovish Fed outlook.
- Gold price reclaims all major Daily Moving Averages en route to the $2,000 mark.
Gold price is sitting at its highest in four weeks, well above the $1,950 mark, as the United States Dollar (USD) lurks near 15-month lows against its main competitors, awaiting a fresh batch of top-tier US data for fresh trading impetus.
Soft US inflation data fans dovish Federal Reserve expectations
The recent narrative that the US Federal Reserve (Fed) is nearing the end of its tightening cycle was reaffirmed following the release of the softer-than-expected US Consumer Price Index (CPI) data on Wednesday.
In the United States, annual CPI inflation fell to 3% in June, marking the 12th consecutive month of declines and the lowest number since March 2021. It compared to 4% in May and 3.1% prediction. The annual US core inflation eased to 4.8% in June vs. 5.0% expected and 5.3% previous while the monthly core CPI rose 0.2% in the reported month, compared with a 0.3% rise expected and May’s 0.4%.
Cooling price pressures in the world’s largest economy alleviates pressure off the Fed to tighten further, reducing bets for rate hikes after the expected 25 basis points (bps) Fed rate hike in July. Earlier this week, several Federal Reserve policymakers provided dovish signals on the Fed’s interest rates outlook during their appearances.
Dovish Fed expectations smashed the US Dollar across the board, alongside the US Treasury bond yields, aiding the latest uptrend in Gold price. The US Dollar Index tumbled to fresh 15-month lows near 100.50 while the benchmark 10-year Treasury bond yields extended its run of losses to near 3.80%. As a result, Gold price briefly topped the $1,960 level, its highest level since June 16.
Markets now look forward to the United States Producer Price Index (PPI) and weekly Jobless Claims data for further cues on the Fed sentiment, which could offer extra legs to the ongoing decline in the US Dollar, bolstering Gold price toward the $2,000 threshold. However, Gold price could pullback if the US Dollar finds support on the return of risk-off flows on China’s growth worries. China’s exports fell the most in three years in June, slumping a worse-than-expected 12.4% on an annual basis, pointing to increasing signs of a struggling global economy.
Gold price technical analysis: Daily chart
With the bullish wedge in play, Gold price broke through all major Daily Moving Averages on the daily timeframe on Wednesday, courtesy of the softer US inflation report.
That said, risks remain skewed to the upside for the Gold price, with the bullish 14-day Relative Strength Index (RSI) adding credence to the potential move higher.
Immediate support is seen at the bearish 50 DMA at $1,956, below which the mildly bullish 100 DMA at $1,952 closes in.
A breach of the latter could fuel a fresh correction toward the upward-sloping 21 DMA at $1,930.
Conversely, the June 16 high at $1,968 will act as a powerful resistance, above which the June 2 high at $1,984 could come into the picture.
Further up, Gold buyers will stay focused on the $2,000 mark.