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November 15, 2022

Gold price is still above $1,775 level

Gold rallies to its highest level since mid-August amid the prevalent USD selling bias.

Bets for less aggressive Fed rate hikes, sliding US bond yields weigh on the greenback.

The softer-than-expected US PPI adds to the heavily offered tone surrounding the buck.

A positive risk tone caps the XAUUSD amid a slightly overbought RSI on the daily chart.

Gold prolongs its recent upward trajectory and touches its highest level since mid-August, around the $1,784-$1,785 region on Tuesday. The XAU/USD maintains its bid tone through the early North American session, with bulls now eyeing a move towards reclaiming the $1,800 psychological mark.

Following the previous day's modest bounce, the US Dollar comes under some renewed selling pressure and extends the softer US consumer inflation-inspired downfall. In fact, the USD Index, which measures the greenback's performance against a basket of currencies, drops to a fresh three-month low and acts as a tailwind for the dollar-denominated gold.

The US CPI report released last week indicated that the worst of the post-pandemic price spike is over and fueled speculations for a less aggressive policy tightening by the Federal Reserve. This is evident from the ongoing decline in the US Treasury bond yields, which continues to weigh on the greenback and offers additional support to the non-yielding gold.

The intraday USD selling picks up pace following the release of the softer-than-expected US Producer Price Index (PPI). The US Bureau of Labor Statistics reported that PPI declined to 8% YoY in October from 8.4% in September, missing expectations for a reading of 8.3%. The Core PPI also missed estimates and decelerated to 6.7% during the reported month from 7.2% in September.

That said, a positive risk tone and indications of a strong opening in the US equity markets keep a lid on any further gains for the safe-haven precious metal. Apart from this, a slightly overbought RSI (14) on the daily chart holds back bulls from placing fresh bets around gold. The fundamental backdrop, however, supports prospects for additional near-term gains.

Hence, any meaningful corrective pullback might still be seen as a buying opportunity and is more likely to remain limited, at least for the time being. Gold seems poised to reclaim the $1,800 mark, which coincides with a technically significant 200-day SMA. This, in turn, should act as a pivotal point for the next leg of a directional move for spot prices.

Technical levels to watch

XAU/USD

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