XAU/USD Current price: $1,957.96
- The United States Producer Price Index added 0.1% YoY in June, beating expectations.
- Federal Reserve´s Mary Daly favored additional rate hikes despite cooling inflation.
- XAU/USD holds on to weekly gains, but investors prefer more interesting assets.
Gold prices consolidated gains on Thursday, with XAU/USD now trading at $1,958 a troy ounce. Financial markets remain optimistic following more signs of easing United States (US) inflation. The country published the Producer Price Index (PPI), which rose by a modest 0.1% YoY and also 0.1% in the month. The core annual reading printed at 2.4%, below the previous 2.8% and the 2.6% anticipated.
The US Dollar sell-off continued throughout the day, yet unattractive safe-haven Gold could not extend gains as investors focus on high-yielding assets. Meanwhile, Wall Street holds on to modest gains, although indexes trade below the post-CPI peaks.
Comments from San Francisco Federal Reserve (Fed) President Mary Daly took their toll on stocks. In an interview with CNN, Daly declared that policymakers need to move rates up to restrictive territory, as the economy still has a lot of momentum, while it is hard to say wage growth is going to lead inflation down.
XAU/USD price short-term technical outlook
The XAU/USD pair surpassed its former weekly high by a few cents, establishing a fresh one at $1,963.56. Technical readings in the daily chart maintain the risk skewed to the upside, but the positive momentum faded. Technical indicators turned flat within positive levels, while a mildly bullish 100 Simple Moving Average (SMA) provides support at around the intraday low of $1,952.40, while the 20 SMA remains directionless way below the longer one, all of which limits the bullish potential.
For the near term, the 4-hour chart suggests an upcoming correction in the makes, although the bearish case is well limited. The Momentum indicator turned south from extreme overbought levels, while the Relative Strength Index (RSI) stands at 71. At the same time, XAU/USD holds well above all its moving averages, with the 20 SMA crossing above the 200 SMA, both at around $1,940. Gold would need to break above 1,967.87, June 16 high, to increase the odds for an approach to the $2,000 threshold.
Support levels: 1,950.70 1,940.95 1,928.60
Resistance levels: 1,967.90 1,983.40 1,996.55