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  • CPI in the U.S. stays unchanged in January.
  • 10-year T-bond yield climbs higher on trade optimism.
  • US Dollar Index rebounds to 97 area.

The XAU/USD pair came under a renewed selling pressure in the early NA session and fell below $1310 pressured by the broad-based USD strength and positive market sentiment. However, with the greenback struggling to preserve its bullish momentum in the last hour, the pair turned positive on the day and was last seen adding 0.2%  on the day near $1313.

The monthly data published by the U.S. Bureau of Labor Statistics on Wednesday revealed that the inflation as measured by the Consumer Price Index stayed unchanged in January on a monthly basis and dragged the annual rate down to 1.6% from 1.9% in December. Further details of the publication showed that the core CPI rose 0.2% and 2.2% in the same period. Although the initial market reaction to the data was relatively muted, the greenback started to gather strength on the back of surging T-bond yields.

After White House Spokeswoman told Fox News that President Trump was weighing possibilities regarding the China trade deadline and added that she saw progress in talks, the 10-year T-bond yield gained traction and was last up adding more than 1% on the day. Supported by that development, the US Dollar Index continued to erase yesterday’s losses and advanced above the 97 handle to weigh on the pair. Right now, the DXY is clinging to modest gains around 96.90.

Meanwhile, major equity indexes in the U.S. started the day in the positive territory to confirm the risk-on mood, which could make it difficult for the pair to push higher in the session.

Technical levels to consider

The pair could face the first technical support at $1307 (20-DMA) ahead of $1300 (psychological level) and $1297 (Jan. 28 low). On the upside, resistances are located at $1315 (Feb. 10/11 high), $1319 (Feb. 4 high) and $1326 (Jan. 31 high).