Inflation Data Puts Pressure on Non-Yielding Bullion 

The Gold Spot Price (XAUUSD) dropped to a one-month low as US inflation data bolstered the Greenback against the Bullion. Headline inflation rose by 0.2% to 3.2%, slightly below the expected 0.3% increase to 3.3%. However, the softer-than-expected headline inflation increases the opportunity cost of holding the non-yielding Bullion as inflation leads to higher bond yields. 

Meanwhile, core inflation remained steadfast at 4.7%, with a marginal 0.1% decrease, while Initial Jobless Claims rose from 227K to 248K. This data has encouraged the Federal Reserve to keep the option of further rate hikes in 2023 open, thereby strengthening the US Dollar. PPI MoM and Michigan Consumer Sentiment data are anticipated today, which could shed light on the state of the US economy. PPI MoM is projected to rise from 0.1% to 0.2%, while Michigan Consumer Sentiment is expected to decrease slightly from 71.6 to 71. What is in store for the Bullion as macroeconomic data in the US begins to weigh in? 


The Gold Spot Price diverged further away from the 50-day moving average on the backdrop of rising headline inflation in the US. A failed breakout attempt at the 78.60% Fibonacci level boosted a downward trend, encouraging the price action to find support at $1912.46 per ounce. If a breakdown of this support occurs, a pullback towards the $1899.38 per ounce major support may mark the continuation of a downtrend.  

However, a slight leg up from the $1912.46 per ounce support may encourage the Spot Price to retest the $1930.19 per ounce resistance at the 23.60% Fibonacci level. A breakout from the 23.60% Fibonacci level may mark a pivot point for a reversal.  


The Gold Spot Price edged lower due to rising headline inflation which could encourage a pullback towards the $1899.38 per ounce major support. However, the leg up from the $1912.46 per ounce support could sustain a movement towards the $1930.19 per ounce resistance, which may mark a pivot point for an upward trend. 

Sources: TradingView, Reuters 

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