GOLD PRICE REVERSES PART OF POST-US CPI DOWNDRAFT AMID MIDDLE EAST TENSIONS

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  • Gold price regains some positive traction following the overnight post-US CPI decline.
  • Persistent geopolitical risks and Fed rate cut bets continue to offer support to the metal.
  • A modest USD uptick and a positive risk tone could act as a headwind for the XAU/USD.

Gold price (XAU/USD) witnessed an intraday turnaround from the vicinity of the record peak and dropped over 1.5% intraday following the release of the US consumer inflation figures on Wednesday. The closely-watched US CPI indicated that inflation is on a downward trend and reaffirmed bets for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle in September. Investors, however, scaled back their expectations for more aggressive policy easing, which led to a modest US Dollar (USD) rebound from the vicinity of a multi-month low touched last week and weighed on the non-yielding yellow metal. 

That said, the risk of a broadening conflict in the Middle East helped limit the downside for the safe-haven Gold price and find some support near the $2,438 area. The precious metal recovered around $10 from the daily low and gained some follow-through traction during the Asian session on Thursday, though a further USD buying keeps a lid on any meaningful appreciating move. Nevertheless, the XAU/USD, for now, seems to have snapped a two-day losing streak as traders now look to the US Retail Sales figures and other important US macro releases for a fresh impetus later during the North American session on Thursday.


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