Gold price (XAU/USD) continues its bleak performance amid headwinds of a strong US Dollar and higher US Treasury bond yields. The precious metal remains under pressure as consumer and producer inflation grew modestly in July but failed to uplift chances of further policy tightening by the Federal Reserve (Fed). The 0.2% monthly increase in the United States Consumer Price Index (CPI) in July is in line with the Fed’s required annual inflation rate of 2%, which keeps policymakers comfortable.
The rise in consumer inflation, mainly driven by higher rentals, could allow the Fed to go light on interest rates and contribute to easing recession fears. This week, Gold price action will likely be guided by the US Retail Sales data for July, which will be published on Tuesday at 12:30 GMT. Gold price declines consistently and is expected to test the round-level support of $1,900.00. The precious metal falls sharply as the 20- and 50-day Exponential Moving Averages (EMAs) delivered a bearish crossover. The Relative Strength Index (RSI) (14) slips below 40.00. The absence of divergence and oversold signals in the RSI (14) suggest more weakness ahead. Gold price forms consecutive Inverted Hammer candlesticks. A breakdown below the $1,910.00 support might trigger a fresh sell-off.