Gold bounces nearer $1,850 as investors await US inflation

The Gold Price Index has witnessed a minor bounce after slipping near the previous week’s low at $1,850.47. A minor receptive buying has been observed but value buying can drive the precious metal higher. The bright metal has displayed a sheer downside on Monday amid broader strength in the US Dollar Index (DXY).

Investors are aware of the fact that upbeat US Nonfarm Payrolls (NFP) has bolstered the odds of a rate hike by Fed in June. The US Bureau of Labour Statistics disclosed 428k job additions in the labour force against the expectations of 391k. Higher job creation has signaled a tight labour market that may compel the Fed to come forward with one more 50 basis points (bps) interest rate hike.

On the other hand, US inflation is seen lower at 8.1% against the multi-decade high of 8.5%. A lower US inflation print could dictate not so aggressive monetary policy by the Fed. Considering the rally in the DXY, it is very much clear that investors are underpinning an upbeat NFP rather than a softer Consumer Price Index (CPI).

Technically; the precious metal is hovering near its critical support which coincides with January’s high and the previous week’s low at $1,854.20. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,872.84 and $1,883.61 respectively are sloping downwards, which adds to the downside filters. Meanwhile, the Relative Strength Index (RSI (14) has slipped below 40.00, which signals a firmer downside move ahead.