Gold Awaits CPI: Breakout or Correction?
Gold prices held steady around US$4,340 per troy ounce during European trading on Monday (August 10). Throughout the day, XAU/USD traded within a range of approximately US$4,313 to US$4,362. Gold remained near seven-week highs following a rally of over 7% last week.
Key support continues to stem from disappointing US labor data. July’s Non-Farm Payrolls (NFP) fell by 23,000 jobs, and figures for the preceding two months were revised downward, reinforcing market conviction that labor market conditions are weakening. The probability of a Federal Reserve rate hike in September has now dropped to around 44%, down significantly from 67% the previous week.
The US dollar also remains near a two-month low. The DXY is hovering around 99.6, while US Treasury yields have declined following the labor report. A weaker dollar and lower yields benefit gold by reducing the opportunity cost of holding non-interest-bearing assets.
Market focus has now shifted to the US CPI release on Wednesday. July inflation is expected to be around 3.4% year-on-year, while Core CPI is projected at approximately 2.5%. Figures below expectations could further dampen the likelihood of a rate hike and support gold, whereas higher inflation could boost the dollar and yields once more.
On the geopolitical front, the agreement between Iran and Oman regarding the Strait of Hormuz remains inconclusive. Iran continues to seek concessions from the United States, while the risk of attacks in the region remains high. Brent crude is trading around US$83–US$84 per barrel, meaning energy-related inflation risks have not yet fully dissipated.
Newsmaker Analysis: Gold's momentum remains bullish; however, following last week's rally of over 7%, the risk of profit-taking warrants attention. The US$4,360 level serves as immediate resistance; a breakout above this could pave the way toward US$4,400. Meanwhile, the US$4,310–US$4,300 zone acts as a critical support level. US CPI will be the key catalyst determining whether the gold rally continues or enters a correction. (arl)
Source: Newsmaker.id
