XAUUSD grinds higher past $1,700 inside weekly bullish channel, US inflation eyed

  • November 10, 2022
  • Gold price remains sidelined inside a bullish chart pattern after reversing from a monthly high the previous day.
  • Markets remain cautiously optimistic but a light calendar restricts immediate XAUUSD moves.
  • Downbeat forecasts from US CPI, bullish channel keep gold buyers hopeful.

Gold price (XAUUSD) picks up bids to reverse the previous day’s pullback from a one-month high, mildly bid near $1,707 as traders await the key US inflation data early Thursday. In doing so, the precious metal justifies downbeat forecasts for the Consumer Price Index (CPI) while also cheering the cautious optimism in the market.

Market consensus suggests that the headlines US CPI will ease to 8.0% YoY from 8.2% prior, while the more important Core CPI may remain mostly unchanged near 6.5%, compared to 6.6% previous readings, during October.

On the same line, the US inflation expectations per the 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data dropped to the lowest levels since October 20. The 5-year inflation precursor eased to 2.53% versus 2.61% prior. That said, a bit broader inflation expectations, however, remained a bit less weak as the 10-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data slid to 2.42% while refreshing the weekly low.

Elsewhere, downbeat Fedspeak and optimism surrounding Russia also seemed to have favored gold buyers.

The New York Federal Reserve (Fed) President John Williams made some comments on inflation expectations in the text of a speech to be delivered to an audience in Zurich. “Relatively stable long-term inflation expectations are good news,” stated the policymaker.

On the same line, Richmond Fed President Thomas Barkin also mentioned that the Fed’s fight against inflation might lead to a downturn in the US economy, but that is a risk that the Fed will have to take.

It should be noted that the recently published US statistics also fail to impress the DXY bulls amid fears of slower rate hikes in December, which in turn favor the XAUUSD buyers.

Russia appears to retreat from the only Ukrainian regional capital captured, namely Kherson, whereas President Vladimir Putin is less likely to attend the upcoming G-20 summit in Bali, starting from November 15.

Amid these plays, equities returned to the red after a three-day absence, while the US Treasury yields also remained depressed. That said, despite posting mild gains, the S&P 500 Futures struggle for clear directions by the press time.

Moving on, gold prices may witness further upside in case of downbeat US inflation numbers.

Technical analysis

Gold price remains inside a one-week-old ascending trend channel, despite the previous day’s pullback from a one-month high. It should be noted, however, that the impending bear cross on the MACD and a likely pullback of the RSI (14) from the overbought territory tease intraday sellers.

That said, the downside remains elusive unless breaking the stated channel’s support line, around $1,690 by the press time.

Following that, multiple levels marked since October 11, around $1,684-82, will precede the 200-SMA level surrounding $1,664 to restrict short-term XAUUSD downside.

Alternatively, recovery moves may aim for the previous monthly peak of $1,730, but the aforementioned channel’s upper line, at $1,738 by the press time, could challenge the metal’s further advances.

Gold price: Four-hour chart

Trend: Limited recovery expected