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  • Gold surges to fresh 2-week high at $1212 earlier today.
  • US Dollar Index finds support below 94.50, recovers modestly.
  • Wall Street erases part of early gains on Trump remarks.

The XAU/USD pair rose to its highest level since August 28 at $1212 earlier in the NA session as the greenback came under a heavy selling pressure following the monthly report showing a lower-than-expected inflation growth in the United States. However, the pair failed to preserve its momentum and erased all of its daily gains. As of writing, the pair was down 0.12% on the day at $1204.80.

The U.S. Bureau of Labor Statistics on Thursday reported that the annual inflation, measured by the core-CPI, eased to 2.2% in August from 2.4% in July and fell short of the market consensus of 2.4%. The initial market reaction to the data dragged the US Dollar Index to a fresh 2-week low 94.43. Although the probability of a second Fed rate hike in December fell to %76.3 from 81.4% seen on Wednesday, according to the CME Group FedWatch Tool,  the dollar didn’t have a difficult time recovering its losses. At the moment, the DXY was still down 0.16% on the day at 94.65.

Meanwhile, major equity indexes in the United States started the day decisively higher to reflect an improved market sentiment and made it difficult for the precious metal find demand as a safe-haven. Although President Trump’s remarks about not being under pressure to make a trade deal with China seem to hurt the risk appetite, both the Dow Jones Industrial Average and the S&P 500 were up 0.3% as of writing.  

Later in the session, FOMC member Quarles will be delivering a speech and  the U.S. Financial Management Service will publish the monthly budget statement.

Technical levels to consider

The initial resistance for the pair aligns at $1212 (daily high) ahead of $1220 (Aug. 3 low) and $1228 (Jul. 31 high). On the downside, supports could be seen at $1200 (psychological level/20-DMA), $1192 (Sep. 12 low) and $1187 (Sep. 11 low).

 

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