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Gold Price sharply bounced during the last hours and stabilized in the positive territory for the day. The precious metal, earlier, bottomed at $1,706 following US inflation data and then redounded rising by $40 within a few minutes.
Gold peaked at $1,745, the highest level in three days. Volatility in prices is expected to remain high on the back of market concerns and wild moves in the US Treasury market.
US Stocks are falling, but are off lows. In money markets, prices reflect inflation as the main concern for Fed officials in the short-term and a growth crisis later as the main issue. While in the short-term bets for more aggressive rate hikes are rising, prices reflect odds of rate cuts for 2023.
The US Labour Department reported Wednesday that the CPI rose 1.3% in June and 9.1% compared to the previous years, the fastest pace since late 1981. The Core CPI, excluding food and energy, increased 5.9% (y/y), below the 6% of the previous month. The CPI reading was above expectations. The US dollar jumped after the report and then turned negative.
Gold initially reacted to a stronger US dollar and higher US yields, falling toward $1,700. When the price looked ready for a slide below to approach the 2021 bottom near $1,675, everything changed. The 10-year yield fell from 3.07% to 2.90% and the 30-year from 3.22% to 3.08%. The US dollar hit a multi-year high at 108.58 and dropped to 107.50.
The spike to $1,706 followed by the rebound is a potential reversal that could anticipate further gains, particularly if it breaks above $1,750. A failure, could keep XAUUSD between $1,750 and $1,730.
