Title: Gold price oscillates above $1,710, remains lackluster despite weaker DXY
Jul 20, 2022 01:52 AM ET
Gold prices are moving back and forth in a narrow range of $1,710.00-1,715.33 in Asian trading. The precious metal is trading weak amid a spiral of volatility. Looking at last week's price action, a balanced auction profile can be seen. Usually, a drop in volatility is followed by an increase in the same, so investors should be prepared for wild moves soon.
As for the dollar, the U.S. Dollar Index (DXY) has declined sharply since the first tick of the trading session. A bearish open-drive structure suggests that the downtrend will continue in the European session. The DXY is set to extend its losses after surpassing Tuesday's low at 106.40. It has dropped more than 2.60% after hitting a new 19-year high of 109.30 last week.
Gold prices are trending sideways after hitting a low of $1,697.44 last week. Currencies considered risky, which are compared with the dollar using the latter as the denominator, have made strong gains in recent trading days. After the U.S. authorities put long-term inflation expectations at 2.8%, lower than the previously reported 3.1%, the greenback weakened across the board. However, the precious metal showed a vulnerable performance, suggesting that the attractiveness of gold has weakened significantly.
After the release of the overall Consumer Price Index (CPI) of 9.1% annualized, investors expected the Federal Reserve (Fed) to follow the Bank of Canada's (BOC) lead and raise its interest rates by 1% this time. However, the publication of long-term inflation expectations of 2.8% reduced the rate hike by 100 basis points.