Gold Stabilizes as Focus Turns to US Inflation Data Releases
The Gold price has stabilized after a two-day decline, helped by the weakening US Dollar. The recent pullback of the USD from its three-week high has gained momentum, and the Japanese Yen's rally is also supporting the non-yielding bullion. However, hawkish expectations for the Federal Reserve's policy path and persistent geopolitical uncertainties are keeping the safe-haven buck strong, which in turn is limiting Gold's gains.
The focus remains on this week's US inflation data releases, particularly the Consumer Price Index (CPI) on Friday. The outlook will play a key role in influencing USD price dynamics and providing an impetus to the Gold price. Strategists at OCBC note that while the recent US payrolls report was supportive of the USD, it is not sufficient to drive a sustained leg higher.
The widening US-Iran confrontation has also kept the geopolitical risk premium in play, limiting losses for the safe-haven Greenback. Investors remain worried about elevated energy prices rekindling inflationary pressures and underpinning prospects for Fed policy tightening, which backs the case for USD dip-buying and warrants caution for XAU/USD bulls.
The technical analysis suggests that the Gold price could face first resistance at $4,523, followed by the recent swing-high zone anchored by the upper Fibonacci reference near $4,697.36. On the downside, initial support is seen at the 38.2% Fibo retracement near $4,415.