XAUUSD continues trek back to $1900 despite higher CPI

The headline CPI (YoY) came in slightly higher-than-expected at 3.7% (vs 3.6% forecasted), fueling inflation resurgence fears and the likelihood of another Fed interest rate hike this year.

The market’s probability estimates of a December rate hike has risen to 33.0% (from 28.2% yesterday).

Given the mixed nature of yesterday’s inflation data (headline CPI increased while core CPI has remained the same at 0.3%), it is still unclear whether the fed would need to further tighten the interest rate policy.

This may leave the room for XAUUSD bulls to test a few more resistance levels ($1880, $1900) in the short term.

The geopolitical tensions in the Middle East might also extend some support to gold as investors seek “safe” assets amid fears of further escalation.

From a technical side …

• XAUUSD is set to test an immediate resistance level at $1878.036 (21-period SMA)
   
• $1900 round number may be the next clear target for XAUUSD bulls
   
• The 14-day relative strength index’s (RSI) position at 49.21 (70 – overbought; 30 – oversold), underscores the markets’ current dilemma between the US interest rates outlook and prolonged safe haven demand