Gold price surges on weak US inflation data, Fed rate cut expectations grow

• 
  Gold
  skyrockets
  above
  $2,400
  after
  softer
  US
  CPI
  sparks
  hopes
  for
  Fed
  rate
  cuts
  in
  2024.
• 
  US
  10-year
  Treasury
  yield
  drops
  10
  basis
  points
  to
  4.187%,
  boosting
  Gold’s
  appeal.
• 
  CME
  FedWatch
  Tool
  shows
  85%
  odds
  for
  September
  rate
  cut;
  US
  Dollar
  Index
  falls
  to
  104.48.

Gold
prices
skyrocketed
sharply
during
Thursday’s
North
American
session
after
the
release
of
the
Consumer
Price
Index
(CPI)
in
the

United
States
opened
the
door
for
the

Federal
Reserve
(Fed)
to
lower
borrowing
costs.
Hence,
US
Treasury
yields
tanked,
a
tailwind
for
the
precious
metal.
The

XAU/USD
trades
at
$2,414,
up
more
than
1.80%
after
bouncing
off
daily
lows
of
$2,371.

Market
sentiment
shifted
sour
as
the
S&P
500
and
the
Nasdaq
100
sank
sharply,
while
the
Dow
Jones
Industrial
advanced.
US
yields
are
collapsing
with
the
10-year
Treasury
note
yield
down
10
basis
points
to
4.187%.

Data
from
the
US
Bureau
of
Labor
Statistics
(BLS)
revealed
that
consumer
prices
deflated
in
June.
Excluding
volatile
items
like
food
and
energy,
the
so-called
core
dipped
as
well,
reigniting
hopes
that
the
Fed
could
cut
rates
in
2024.

The
CME
FedWatch
Tool
shows
85%
odds
for
a
quarter-point
percentage
rate
cut
in
September,
up
from
Wednesday’s
70%
chances.

The
December
2024
fed
funds
rate
futures
contract
implies
that
the
Fed
will
ease
policy
by
49
basis
points
(bps)
toward
the
end
of
the
year,
up
from
39
a
day
ago.

Other
data
showed
the
labor
market
remains
robust
as
the
number
of
Americans
filing
for
unemployment
benefits
missed
the
consensus
and
came
in
lower
than
the
previous
reading.

Today’s
US
data
presents
a
balanced
Goldilocks
scenario:
inflation
is
decreasing
while
employment
remains
strong,
with
no
signs
of
an
impending
recession.

Meanwhile,
the
US
Dollar
Index
(DXY),
which
tracks
the
value
of
a
basket
of
six
currencies
against
the
US
Dollar,
plummeted
more
than
0.40%
and
is
down
at
104.48.

Ahead
of
the
week,
the
US
economic
schedule
will
feature
the
Producer
Price
Index
(PPI)
for
June
and
the
University
of
Michigan
Consumer
Sentiment
survey
for
the
same
period.

Daily
digest
market
movers:
Gold
soars
due
to
Fed
rate
cut
hopes

• June
  US
  Consumer
  Price
  Index
  (CPI)
  contracted
  by
  -0.1%
  MoM,
  missing
  the
  forecast
  of
  a
  0.1%
  increase.
  Core
  CPI
  also
  ticked
  lower
  from
  0.2%
  in
  May
  to
  0.1%
  in
  June,
  aligned
  with
  estimates.
• Over
  the
  12
  months
  to
  June,
  headline
  US
  inflation
  dropped
  to
  3%,
  down
  from
  3.3%,
  while
  core
  inflation
  slumped
  to
  3.3%,
  below
  estimates
  and
  down
  from
  the
  previous
  month’s
  3.4%.
• Initial
  Jobless
  Claims
  for
  the
  week
  ending
  July
  6
  came
  in
  better
  than
  expected
  at
  222K,
  below
  the
  consensus
  of
  236K
  and
  the
  previous
  reading
  of
  239K.
• According
  to
  the
  CME
  FedWatch
  Tool,
  odds
  of
  a
  September
  rate
  cut
  have
  increased
  to
  84%,
  up
  from
  72%
  on
  Wednesday.
• Bullion
  prices
  retreated
  somewhat
  due
  to
  the
  People’s
  Bank
  of
  China’s
  (PBoC)
  decision
  to
  halt
  Gold
  purchases
  in
  June
  as
  it
  did
  in
  May.
  China
  held
  72.80
  million
  troy
  ounces
  of
  the
  precious
  metal
  at
  the
  end
  of
  June.

Technical
analysis:
Gold
price
climbs
above
$2,400,
invalidates
Head-and-Shoulders

Gold
price
resumed
its
aggressive
uptrend
and
decisively
broke
the
Head-and-Shoulders
neckline,
invalidating
the
chart
pattern
and
opening
the
door
for
higher
prices.
Momentum
remains
on
the
buyers’
side,
with
the
Relative
Strength
Index
(RSI)
finally
showing
signs
of
direction,
trending
up.

That
said,
the
path
of
least
resistance
is
to
the
upside.
The
XAU/USD
first
resistance
would
be
the
year-to-date
high
of
$2,450,
ahead
of
the
$2,500
mark.
Conversely,
if
Gold
slides
below
the
$2,400
figure,
the
next
demand
zone
will
be
the
July
5
high
at
$2,392.
If
cleared,
XAU/USD
would
continue
to
$2,350