Gold Declines as US Inflation Stabilises

The price of gold (XAU/USD) dropped after briefly touching resistance at $1,930.00, influenced by the consistent U.S. Consumer Price Index (CPI) results. July’s monthly headline and core inflation increased by 0.2%, in line with market expectations. The yearly main CPI was slightly below the anticipated 3.3% at 3.2%, but it surpassed the previous value of 3.0%. Core inflation, which excludes volatile components like oil and food, decreased to 4.7%, contrary to expectations and the previous figure of 4.8%. The reduced demand from central banks seems to still be in play.

Analysis of the U.S. inflation figures for July suggests that the Federal Reserve (Fed) might not alter the monetary policy in September. Nevertheless, it might consider further policy tightening. In another development, rising mortgage rates, which recently peaked at 7.09%, could affect consumer confidence.

Technical Analysis

Gold price appears to have reached a new monthly low of $1,916 and seems prone to further declines. Having consistently stayed beneath both the 20 (yellow) and 50-day (purple) Exponential Moving Averages (EMAs), gold is now trending towards the 200-day EMA (pink) set at $1,904.00. The RSI has dipped below 50 and is heading towards 30, showing no sign that an upward turn is forecast in the short term. Further negative moves would mean the precious metal could break through the recent support of $1.901 and face the lows seen in March this year.