Gold eases below $1280 as DXY turns positive on the day
- Gold retreats more than $10 from daily highs in the NA session.
- Greenback gathers strength against its peers following CPI-led sell-off.
- US stocks open lower for fifth straight session.
After touching its highest level since October 20 at $1289, the XAU/USD pair reversed course in the NA session and turned negative on the day as the USD started to recover its losses. At the moment, the pair is trading at $1278, down $2.3, or 0.2%, on the day.
US CPI data affirms December rate hike
Today's data from the U.S. showed that the inflation measured by the CPI rose by 0.1% on a monthly basis in October, bringing down the annual rate to 2% from 2.2%. Other data revealed that following September's hurricane-related 1.9% growth, retail sales increased by 0.2% in October. Although the initial reaction brought the DXY down to a fresh multi-week low at 93.30, the index staged a decisive recovery. As of writing, the index was at 93.80, up 0.07% on the day.
- US: CPI for all items increases 0.1% in October as shelter index rises
- CME Group's December rate hike probability eases to 91.5% after US CPI data
Comments from White House officials on Wednesday suggested that Republicans were looking to repeal Obamacare to make room for the proposed tax cuts in the federal budget. On Thursday, House Republicans are going to be votine on the tax bill, according to the latest market chatter. In the meantime, after dropping sharply in the first hour of the session, major equity indexes in the U.S. erased a portion of their losses, further denting the demand for traditional safe-havens such as gold. With no more data left in the remainder of the day, the DXY and the market sentiment are likely to drive the price action of the pair.
- US stocks sink during opening hour of trade
Technical outlook
The CCI indicator on the daily graph for the pair is struggling to rise above the 100 mark, suggesting that buyers don't show commitment. The initial hurdle for the pair could be seen at $1290 (daily high) ahead of $1300 (psychological level) and $1306 (Oct. 16 high). On the downside, supports align at $1275 (20-DMA), $1270 (200-DMA) and $1260 (Oct. 6 low).