Gold rallied more than 2% yesterday to a 2-month high, after US inflation data showed a slight slowdown in October. This raised hopes that the Fed will start slowing down its pace of interest rate hikes. Gold spot prices surged 2.8% to $1,757 per troy ounce yesterday.
US CPI data recorded at 0.4% in October pushed the USDIndex down 2% to a two-month low, making Gold cheaper for market participants who do not hold USD.
Fed fund futures now estimate there is a 72% chance that the Fed will only raise rates by 50 basis points at their December monetary policy meeting.
The US Dollar’s decline to an 8-week low on Thursday pushed the metals complex sharply higher. Gold prices also rose due to falling global government bond yields. Moreover, rising Covid infections in China boosted safe-haven demand for precious metals, after China reported 8,404 new Covid infections on Wednesday, the most in more than six months.
The Gold price’s rebound from a triple bottom pattern has taken it to the 200-day exponential moving average, after breaking away from 1729.44 and 1735.00 resistance. The extended rally is expected to test the nearby 1765.39 resistance and further upside movement would target the 1800.00 round number slightly above the 38.2% retracement level (1789.00) drawn from 2070.35 to 1614.69.
Intraday bias remains to the upside, with a possible test of 1765.39 minor resistance or the internal trendline, before moving further to the upside. On the downside, 1729.44 support will give room for a corrective decline. Broadly speaking, the intraday outlook is positive.