Gold is dragged down, trading around $1,830. However, a big miss on US CPI may drive XAU/USD above the 200-day moving average (DMA) at $1850, FXStreet’s Dhwani Mehta informs.
“Heading into the US CPI showdown this Wednesday, gold returns to the red zone, as the US dollar’s safe-haven demand remains in vogue amid an escalation of tensions between Israel and Gaza. Further, markets remain unnerved ahead of the US CPI April month report amid concerns of a potential acceleration in price pressures and its implication on the economy.”
“A CPI disappointment could tame inflation fears and squash Fed’s tapering and tightening expectations, which is likely to trigger a renewed burst of demand for the gold price.”
“A daily closing above the 200-DMA at $1850 could revive the bullish bets towards the $1900 mark.”
“Gold prices could challenge Tuesday’s low of $1818, below which the May 7 low of $1813 will be on the sellers’ radars. The 100-DMA at $1796 could act as a strong support if the correction from multi-month highs of $1846 regains traction.”
Our intraday perspective is that we could see lower prices today from a technical viewpoint, however we need to be aware of US CPI out later. We have a potential sell area of interest around $1835-$1839 and will be interested should price action present an opportunity on a smaller timeframe. Levels have been indicated on the chart below. Safe Trading