FX.co ★ GokBoruHunter | XAU/USD, GOLD

Gold (XAU/USD) Daily Outlook Update Gold (XAU/USD) bulls have managed a modest recovery on Friday, driven by declines in US Treasury yields and Oil prices. However, buying demand stays weak ahead of the release of the US CPI data at 12:30 GMT. As the graph shows, XAU/USD hovers around $4,343. Gold fell by almost 2% during yesterday's trading as US Treasuries rose to multi-year highs amid growing inflation fears, fueled by rising tensions in the Middle East, pressuring Fed policymakers to consider rate hikes. In addition, gold tends to perform poorly when interest rates rise because higher Treasury yields make it more costly to hold precious metals, which carry no returns. Indeed, the benchmark 10-year US Treasury yield is currently trading around 4.93%, having reached 4.97% during today's session. This was its highest since October 2023. Meanwhile, WTI oil hovers around $96, down more than 4.6% during today's session after trading above $100. Notably, despite the sharp fall, WTI is still expected to close two consecutive weekly gains. Higher energy prices have affected producer prices, as indicated by Thursday's Producer Price Index (PPI) reading. Producer prices grew faster in August, increasing to 5.4%, compared to a rise of 4.8% in the preceding month of July. Inflation is likely to rise 0.4% MoM in August, up from 0.1% last month. Meanwhile, the annual rate will likely remain unchanged at 3.4%. Core CPI will likely rise 0.2% MoM, similar to last month's figure. However, annual core inflation is likely to fall to 2.4% from 2.5%. According to the CME FedWatch Tool, markets price in a 67% probability of a 25 bps rate hike at the September 15-16 meeting. Stronger-than-expected CPI data could make a rate hike more likely in the USA, thereby propelling the US Dollar and US Treasuries higher. On the other hand, the weak inflation report would ease worries about a tightening move. Hence, gold may see further upside traction. TD Securities said the yellow metal held support in the higher range despite new upward pressure from energy and the prospect of a Fed rate hike. Indeed, according to the bank, solid figures along with the hawkish stance could spark only slight selling, pushing the next phase of growth further out. This means no significant downward trend is expected. On a longer time horizon, TD Securities says the debasement story, rising CB purchases, and ETFs are creating robust support for bulls. The bank suggests these factors will help keep downside risks limited within a favorable environment for precious metals such as gold. Currently, the XAU/USD pair continues its movement above the 100-day Simple Moving Average level of $4,336 with cautious optimism. Moreover, price has held the daily support level of $4,300 in the hypothetical Head-and-Shoulders formation. On the daily timeframe, the Relative Strength Index is slightly below 50, suggesting low buying or selling pressure. Meanwhile, a weakening Average Directional Index indicates that the existing trend is losing momentum. Under these circumstances, a break below the 100-day SMA and the $4,300 neckline would confirm a trend reversal to the bears' favor. In that scenario, price would test support at $4,269, the 50-day SMA, followed by $4,200 and $4,000. On the upside, critical resistance lies at the 200-day SMA level of $4538. A breakout above this key resistance would reduce the influence of the prevailing bearish pattern. As such, the buyers may test the August 25th highs at $4697.