FX.co ★ XAU/USD, GOLD

XAU/USD Due to a stronger US dollar and higher than expected US inflation statistics, gold is trading defensively on Tuesday. Expectations that the Federal Reserve would maintain higher interest rates for a longer period of time were strengthened by the acceleration of US inflation in April. Technically, RSI and ATR indicate muted momentum and lowering volatility, while XAU/USD is still capped below the 100-day SMA. As hotter-than-expected US inflation data raises US Treasury yields and the US dollar (USD), gold (XAU/USD) continues to decline on Tuesday, reversing the gains of the day before. After reaching a three-week high of $4,773 during the Asian session, XAU/USD is currently trading at about $4,665, down almost 1.50%. April saw an increase in US consumer inflation, mostly due to rising energy costs as oil prices continued to rise due to disruptions near the Strait of Hormuz. According to data issued by the Bureau of Labour Statistics, annual inflation increased to 3.8% from 3.3% in March, exceeding projections of 3.7%, while the headline Consumer Price Index (CPI) increased 0.6% MoM in April after rising 0.9% in March, matching market expectations. In the meantime, the core CPI which does not include volatile food and energy prices rose 0.4% monthly, exceeding forecasts of 0.3% and up from 0.2% in March. Core inflation increased to 2.8% annually from 2.6%, surpassing projections of 2.7%. Expectations that the Federal Reserve (Fed) would maintain higher interest rates for a longer period of time or possibly consider rate hikes were strengthened by the better-than-expected inflation figures, which raised US Treasury yields. Gold and other non-yielding assets are less appealing in an environment with higher interest rates because they don't provide any income or interest.