Title: XAU/USD steadies near $1,770 as DXY pares NFP-led gains ahead of US inflation

August 8, 2022 03:01 AM ET

By: AnalysisWatch

In gold prices (XAU/USD), intraday losses were trimmed to around $1,775 in the early hours of Monday in Europe. The yellow metal's recent rally may be related to technical support as well as a pullback in the U.S. dollar amid a sluggish start to the key week.

However, the U.S. dollar index (DXY) is tracking Treasury yields to trim post-NFP gains. Still, the DXY fell to 106.65 after hitting a two-week high of 206.93 the previous day. It is worth noting that U.S. 10-year Treasury yields retreated back to near 2.816% after rising 14 basis points (bps) to 2.83% following the strong U.S. July jobs report.

Moreover, S& P 500 futures posted marginal gains, while Asia-Pacific equities remained indecisive as Taiwan-related fears eased.

Elsewhere, strong prints in U.S. fund futures suggest that the Federal Reserve will raise the benchmark interest rate by 75 basis points (bps) in September, leaving XAU/USD bears hopeful despite the recent rally. The U.S. Consumer Price Index (CPI) for May, which will be released on Wednesday, will be crucial for the near-term.

In addition, the recent rebound in Chinese trade figures and rumors that the dragon nation will overcome the recent economic crisis seem to have supported the corrective pullback in the XAU/USD, as Beijing is one of the largest gold consumers in the world.

Gold remains defensive around the 50-day moving average, easing off the bounce from a two-week-old support line, and was trading around $1,770-$69 at press time. Given the MACD's recent easing bearish bias and the metal's continued trading beyond the short-term key support line, the price is likely to remain firmer.