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May 27, 2024
PI Global Investments

XAU/USD consolidates around $2,030, awaits US CPI on Thursday


  • Gold price lacks a firm intraday direction and remains close to a multi-week low set on Monday.
  • Elevated US bond yields act as a headwind amid reduced bets for a more aggressive Fed easing.
  • Subdued USD price action helps limit the downside ahead of the key US CPI report on Thursday.

Gold price (XAU/USD) struggles to gain any meaningful traction following the previous day’s late pullback from the $2,040 area and oscillates in a narrow trading band during the Asian session on Wednesday. Traders now seem reluctant and prefer to wait for the release of the latest consumer inflation figures on Thursday before placing fresh directional bets.

The crucial US CPI report will influence expectations about the Fed’s future policy decisions and help in determining the near-term trajectory for the non-yielding Gold price. Heading into the key data risk, the incoming US macro data pointed to a still-resilient economy, which is experiencing above-target inflation. Adding to this, hawkish remarks by Fed officials forced investors to scale back their expectations for more aggressive policy easing in 2024. This remains supportive of elevated US Treasury bond yields and is seen as a key factor acting as a headwind for the yellow metal.

Apart from this, a generally positive tone around the equity markets further contributes to capping the safe-haven Gold price. The US central bank, meanwhile, pivoted to a more cautious stance at its December meeting and signalled that it would lower borrowing costs in 2024. Market participants, however, remain uncertain over the timing of when the Fed will start cutting interest rates. This keeps the US Dollar (USD) bulls on the defensive and lends support to the XAU/USD. Nevertheless, the precious metal remains well within the striking distance of a nearly three-week low touched on Monday.

Moving ahead, there isn’t any relevant market-moving economic data due for release from the US on Wednesday, leaving the USD at the mercy of the US bond yields. Apart from this, the broader risk sentiment might provide some impetus to the Gold price and allow traders to grab short-term opportunities. Meanwhile, the precious metal’s inability to attract buyers supports prospects for an extension of a well-established downtrend witnessed over the past two weeks or so.

Technical levels to watch


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