Gold (XAU/USD) extends its advance on Friday, reversing most of the previous day’s losses despite increased Federal Reserve (Fed) interest-rate hike expectations following the release of the latest United States (US) Consumer Price Index (CPI) report. A pullback in US Treasury yields and Oil prices helps the precious metal recover. At the time of writing, XAU/USD trades around $4,380, up 1.65% on the day after touching an intraday low near $4,300.
The precious metal fell nearly 2% on Thursday as surging Oil prices stoked inflation concerns and drove US Treasury yields to multi-year highs. The benchmark 10-year US Treasury yield trades around 4.91% after touching 4.97% earlier in the day, its highest level since October 2023. Meanwhile, West Texas Intermediate (WTI) Oil trades near $96 after briefly climbing above $100, down about 4.6% on the day. Despite the sharp pullback, WTI remains on track for a second consecutive weekly gain.
US CPI report came broadly in line with expectations, limiting the immediate market reaction. Headline inflation rose 0.4% MoM in August, matching forecasts but accelerating from the 0.1% increase recorded in July. The annual rate held steady at 3.4%, also in line with market expectations.
Core CPI, which excludes volatile food and energy prices, increased 0.3% MoM, above the 0.2% forecast and the previous reading of 0.2%. Annual core inflation eased to 2.4% from 2.5%, matching expectations. Gasoline prices rose 3.9% in August and accounted for more than one-third of the monthly increase in headline inflation.
The US Dollar briefly strengthened following the release but struggled to hold its gains. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99 after climbing to 99.36 in the immediate reaction to the data.
The CPI figures follow Thursday’s Producer Price Index (PPI) report, which showed that annual producer inflation accelerated to 5.4% in August from 4.8% in July. According to the CME FedWatch Tool, markets now price in an 88% probability of a 25-basis-point interest-rate hike at the Fed’s September 15-16 meeting, up from 67% earlier in the day.
According to TD Securities, “the yellow metal has been able to hold support in the higher range, even as the market grapples with renewed energy upside and the near-term increase in Fed hike probabilities.” The bank argues that “strong data and a hawkish Fed may only catalyze relatively modest near-term selling, postponing the timing of the next leg higher, rather than leading to material downside.”
On a more strategic horizon, TD Securities highlights that “the renewed dollar-debasement theme, elevated central bank buying and renewed ETF accumulation offer a strong support base,” reinforcing the view that any short-term weakness is likely to be contained within a broader constructive backdrop for gold.
Technical analysis: XAU/USD defends Head-and-Shoulders neckline near $4,300
XAU/USD maintains a cautiously constructive bias while trading above the 100-day SMA near $4,336 and respecting the $4,300 neckline of a potential Head-and-Shoulders formation on the daily chart. The Relative Strength Index (RSI) sits just below 50, pointing to subdued momentum, while the declining Average Directional Index (ADX) suggests that the prevailing trend is losing strength.
On the downside, a decisive break below the 100-day SMA and the Head-and-Shoulders neckline near $4,300 would confirm the bearish pattern and expose the 50-day SMA at $4,269, followed by $4,200 and $4,000.
On the topside, the 200-day SMA at $4,538 acts as the main resistance. A sustained break above this level would weaken the bearish pattern and open the door to a retest of the August 25 high near $4,697.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.07% | -0.23% | 0.15% | -0.16% | -0.35% | 0.32% | |
| EUR | -0.18% | -0.10% | -0.39% | -0.03% | -0.35% | -0.57% | 0.14% | |
| GBP | -0.07% | 0.10% | -0.29% | 0.09% | -0.24% | -0.44% | 0.26% | |
| JPY | 0.23% | 0.39% | 0.29% | 0.38% | 0.06% | -0.16% | 0.54% | |
| CAD | -0.15% | 0.03% | -0.09% | -0.38% | -0.32% | -0.54% | 0.17% | |
| AUD | 0.16% | 0.35% | 0.24% | -0.06% | 0.32% | -0.20% | 0.48% | |
| NZD | 0.35% | 0.57% | 0.44% | 0.16% | 0.54% | 0.20% | 0.71% | |
| CHF | -0.32% | -0.14% | -0.26% | -0.54% | -0.17% | -0.48% | -0.71% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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