Gold price is falling towards the 200-day moving average, and if it falls further, it will test the $1,900 mark. This decline in the gold market is a result of uncertainty about whether the Federal Reserve will raise interest rates in September. Despite the slightly lower than expected year-on-year increase in the core CPI in the United States in July, the increase was still higher than the previous month and far from the core 2% inflation target.
On August 10, gold experienced a sluggish trend, rising initially and then diving, ending the day with a 0.08% fall and closing at $1912.14. The labor department’s release of the consumer price index showed a 0.2% increase in July, in line with expectations. However, the annual rate of inflation rose 3.2% over the past 12 months, breaking a 12-month streak of declines. The report also showed that core CPI rose 0.2% in July, but it rose 4.7% this year, below expectations for a 4.8% increase.
Analysts believe that the Fed cannot afford to cut rates soon as core inflation remains above its 2% target. San Francisco Fed President Daly stated that it was too early to declare victory for inflation despite soft data on consumer inflation for July. Whether the September interest rate meeting will continue to raise interest rates is still uncertain, and it will depend on the remaining set of inflation data to be released.
Technically, gold continues to be under pressure below short-term moving averages and is in a weak downward trend. The price is heading towards the 200-day EMA around $1907.00. If it fails to hold, it will test the $1,900 mark, followed by $1,985. The current strong resistance is at around $1,947.
In conclusion, the gold market is experiencing a decline as uncertainty remains about the Federal Reserve’s interest rate decision in September. The decline in the gold price towards the 200-day moving average indicates a weak trend, and if it falls further, it will test the $1,900 mark.