Gold Poised For Mid-$1,800 Challenge Amid U.S. Dollar Flight
A couple of weeks ago, we predicted that a strong US dollar, regardless of what inflationary readings for July showed, could send the spot price of gold below the key $1,900-an-ounce support.
The spot price, which goes by the trade symbol of XAU and tracks real-time trades of bullion, was then emerging from a one-month low beneath $1,922. Some gold traders follow XAU more closely than futures, which are known by the GC symbol.
True enough, the US Consumer Price Index’s annual growth of 3.2% in July — a tad lower than the forecast 3.3% and a little higher than June’s 3.0% — barely dented the rebound of the dollar from 15-month lows.
The Dollar Index, known by the symbol DX, fell to 99.22 on July 18, its lowest since April 2022. DX now hovers at just around 103.
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XAU, on the contrary, sank below $1,897 in the past 24 hours, hitting its lowest since June 29. On the futures side, the front-month GC contract on New York’s Comex, December, wasn’t too far from the spot price, tumbling to $1,895 on Tuesday.
At the time of writing, December gold had recovered to around $1,935. But XAU hovered at under $1,905. The spot price’s vulnerability to another break below $1,900 is one reason why it's more closely followed than futures.
While the July CPI data raised more questions than it provided clues on how the Federal Reserve might respond to latest US inflationary numbers, Tuesday’s retail sales reading for last month emitted a stronger hawkish signal for the central bank.
US retail sales beat expectations by growing twice more in July than in June, according to Commerce Department data on Tuesday that also raised expectations for the Federal Reserve to consider another
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