XAU/USD Snaps Four-week Winning Streak, Eyes On US CPI Data

1. XAU/USD Snaps Four-week Winning
Streak, Eyes On US CPI Data

2. Point To Be Covered Today:
• Gold Struggled To Recover
• Gold Started The New Week
• What Happened Last Week
• Consumer Sentiment Index Data
• Gold Technical Outlook
• Gold Sentiment Poll

3. Gold Struggled To Recover
• Gold struggled to recover its losses after
breaking below key technical levels.
• Risk-off flows helped USD gather
strength throughout the week.
• Investors await US CPI data ahead of
Fed's policy decisions on September 22.

4. Gold Started The New Week
• Gold started the new week in a calm manner and
consolidated the previous week’s gains on
Monday.
• With the trading volumes returning to normal
levels following the Labor Day holiday in the US,
the XAU/USD pair turned south and lost 1.6% on
Tuesday as the risk-averse market environment
helped the greenback find demand.
• Although the pair was able to erase a small
portion of its losses on Thursday, it closed the
week below $1,800 and lost nearly 2%.

5. What Happened Last Week
• The data from China revealed on Tuesday that
Exports rose by 25.6% on a yearly basis in
August, compared to the market expectation
of 17.1%.
• Additionally, Eurostat reported that the Gross
Domestic Product (GDP) in the euro area
expanded by 2.2% on a quarterly basis in the
second quarter, bettering analysts' estimate
for a contraction of 0.6%.

6. The US Dollar Index (DXY)
• Despite these upbeat data releases, however,
the market mood soured and major global
equity indexes posted losses.
• In turn, the US Dollar Index (DXY) rose 0.35%
and forced XAU/USD to edge lower.
• On Wednesday, the US Bureau of Labor
Statistics announced that JOLT Job Openings
reached a new series-high of 10.9 million in
July.

7. The US Dollar Index (DXY) - I
• On a negative note, the IBD/TIPP Economic Optimism
Index fell to its lowest level of 2021 at 48.5 in
September from 53.6 in August.
• These figures failed to impact the market sentiment
and the USD preserved its strength against its major
rivals.
• Following its September policy meeting, the European
Central Bank (ECB) noted in its statement that
favourable financing conditions could be maintained
with a moderately lower pace of Pandemic Emergency
Purchase Program (PEPP) purchases

8. The EUR/USD Pair Push Higher
• The initial market reaction to this seemingly hawkish
forward guidance helped the EUR/USD pair push
higher and the modest selling pressure surrounding the
greenback paved the way for a rebound in XAU/USD.
• Nevertheless, ECB President Christine Lagarde clarified
that this decision was an adjustment rather than
tapering and capped EUR/USD's upside.
• Meanwhile, the US Department of Labor's weekly
publication showed that the Initial Jobless Claims fell to
the lowest level since the beginning of the pandemic at
310,000.

9. The DXY Staged A Rebound
• Ahead of the weekend, investors largely ignored
the data from the US that revealed the Producer
Price Index (PPI) for final demand rose to 8.3% on
a yearly basis in August from 7.8% in July.
• After starting the last day of the week in the
positive territory, Wall Street's main indexes
turned south and the DXY staged a rebound,
causing XAU/USD to close near the lower limit of
its weekly range.

10. Consumer Price Index (CPI)
• The first high-impact data release of the week will
be Tuesday's Consumer Price Index (CPI) report
from the US.
• Cleveland Federal Reserve Bank President Loretta
Mester said on Friday that she sees upside risks
to the inflation forecast and voiced her support
for tapering to start before the end of the year.
• On a similar note, Atlanta Federal Reserve
President Raphael Bostic noted that it would be
appropriate to taper sometime this year.

11. The USD And Vice Versa
• A stronger-than-expected CPI reading could
cause investors to start pricing in a reduction
in the Fed's asset purchases and provide a
boost to the USD and vice versa.
• On Wednesday, Chinese Industrial Production
and Retail Sales figures will be looked upon for
fresh impetus.

12. Market Reaction To Latest Trade
• However, the muted market reaction to the
latest trade data from China suggests that the
impact of these readings on market sentiment
is likely to remain limited.
• Retail Sales and Philadelphia Fed
Manufacturing Survey will be featured in the
US economic docket on Thursday ahead of the
University of Michigan's preliminary
Consumer Sentiment Index data on Friday.

13. Consumer Sentiment Index Data

14. Consumer Sentiment Index Data - I

15. Gold Technical Outlook
• Following the decline witnessed in the first
half of the week, gold's near-term technical
outlook seems to have turned neutral with a
bearish bias.
• In addition to the fact that XAU/USD close
below both the 100-day and the 200-day
SMAs for the fourth straight day on Friday, the
Relative Strength Index (RSI) indicator on the
daily chart retreated below 50.

16. Gold Technical Outlook - I
• On the downside, the initial support is located at $1,790,
where the Fibonacci 38.2% retracement of the latest
uptrend is located.
• A daily close below that level could open the door for
additional losses toward $1,780 (static level, Fibonacci
50% retracement) and $1,760 (static level).
• The initial resistance could be seen in the $1,800/05 area
(psychological level, 50-day SMA, Fibonacci 23.6%
retracement) ahead of $1,810 (200-day SMA) and $1,815
(100-day SMA).

17. Gold Technical Outlook - II

18. Gold Sentiment Poll
• Despite gold's poor performance this week,
FXStreet Forecast Poll shows that experts see
a rebound next week with an average target of
$1,813.
• Both the monthly and the quarterly outlooks
show that the bullish bias is expected to
remain intact.

19. Gold Sentiment Poll - I

20. XAU/USD Snaps Four-week Winning
Streak, Eyes On US CPI Data

21. Thanks for listening
XAU/USD Snaps Four-week
Winning Streak, Eyes On US CPI
Data