FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) rebounded strongly from its intraday low below $4,300 and held above the 100-day simple moving average of $4,335 following the release of key US inflation data. This macroeconomic data fueled widespread speculation that an interest rate hike at the upcoming Federal Reserve policy meeting is virtually certain, triggering immediate volatility in the foreign exchange and commodity markets. As of this writing, spot gold is trading higher around $4,373, having made significant gains for the day, as market participants digest the data and its subsequent impact, as well as changes in US Treasury yields. The initial trigger for the market volatility was the August Consumer Price Index (CPI) report, which showed headline inflation rising 0.4% month-on-month and 3.4% year-on-year in August, perfectly in line with market expectations. Meanwhile, the core consumer price index rose 0.3% month-over-month, exceeding market expectations of 0.2%, while the year-over-year index remained steady at 2.4%. Although this data initially boosted the dollar, its upward momentum quickly faded as currency markets priced in a 91% probability of an interest rate hike by the Federal Reserve. As a result, the US dollar index settled around 99.00, while lower US Treasury yields provided ample room for gold, a non-interest-bearing asset, to rise during the trading session. At the same time, a consumer confidence survey painted a more cautious picture of the domestic economic situation. The University of Michigan's consumer sentiment index fell to 47.8 in September from 51.7, weighed down by rising fuel prices and ongoing trade tensions. Surveyed consumers indicated they expect inflation to rise in the near term and raised their one-year inflation forecast from 4% to 4.6%. Despite ongoing concerns among households, precious metals prices benefited from a decline in the benchmark 10-year US Treasury yield, which fell to 4.95% after a notable weekly gain. Looking ahead, gold's direction will largely depend on the upcoming policy statement from the Federal Reserve and the subsequent press conference held by Fed officials.

From a broader economic data perspective, upcoming figures, such as employment changes, retail sales figures, regional manufacturing indices, and weekly initial jobless claims, will continue to influence market expectations. Technically, price action suggests a slight upside for gold, but it continues to face strong selling pressure near the $4,400 level, limiting its potential for significant expansion. While the Relative Strength Index (RSI) is trending upward, it remains below the neutral level, indicating continued potential selling pressure. The current resistance level is considered strong around $4,400. A sustained break above this level would likely target $4,450 and $4,500, followed by the 200-day moving average (around $4,538). Conversely, a decline would require a break below the 100-day moving average (around $4,335) and the structural support level at $4,300. Failure to hold at these levels would point to the September lows (around $4,282) and the 50-day moving average (around $4,269).