• Gold remains depressed at the lowest levels in 10 months.
• Risk-aversion underpins the US dollar’s safe-haven demand as record inflation expectations propel recession woes.
• Concerns over China also weighed on metal prices.
• US CPI, risk catalysts are important for intraday directions.

Gold Price (XAU/USD) fades a bounce off the lowest levels since September 2021, marked the previous day, as it retreats to $1,733 during Tuesday’s Asian session. The metal’s latest weakness could be linked to the market’s rush towards risk-safety amid fears of higher inflation and economic slowdown.

The all-time high US inflation expectations and comments from the US policymakers suggesting more pain ahead escalated the fears of economic slowdown, which in turn propelled the risk-off mood. Also weighing on the XAU/USD is Friday’s upbeat US employment data and geopolitical/trade fears.

That said, one-year US inflation expectations jumped to the record high of 6.8% in June, versus 6.6% prior, per the NY Fed’s survey of one-year-ahead consumer inflation expectations. It’s worth noting the latest US jobs report mentioned the US Nonfarm Payrolls (NFP) rose by 372K for June, versus expected 268K and downward revised 384K prior while the Unemployment Rate remained unchanged at 3.6%.

On a different page, White House Press Secretary Karine Jean-Pierre told reporters that she expects new Consumer Price Index (CPI) data to be highly elevated. Further, Atlanta Fed President Raphael Bostic said that recent inflation data has not been as encouraging as I would have liked, per Reuters.

Additionally, Shanghai’s first coronavirus Omicron sub-variant BA-5 case escalated virus woes after the dragon nation failed to sustain the unlock activities. Moreover, inflation data from the Asian major and doubts over Beijing’s GDP goal, as well as on the stimulus’ ability to renew optimism, exert additional downside pressure on the market sentiment and gold prices.

Against this backdrop, equities remained depressed and the US Treasury yields kept flashing recession fears. S&P 500 Futures, however, print mild gains by the press time.

Looking forward, Wednesday’s US inflation data will be crucial for this week while chatters surrounding recession and the Fed’s hawkish path could entertain XAU/USD traders.

Technical analysis

Although oversold RSI (14) offers a breathing space to the gold sellers around a multi-month low, the metal remains on the bear’s radar unless crossing the support-turned-resistance from December 2021, around $1,755.

Even if the XAU/USD manages to rise past $1,755, the 61.8% Fibonacci retracement of March 2021-2022 upside, around $1,828, could challenge the buyers.

Meanwhile, a convergence of the 15-month-old horizontal support and a downward sloping trend line from February offers the key support of around $1,720 for gold traders to watch. Also acting as a downside filter is an ascending trend line from March 2021, close to $1,708 by the press time.

Gold: Daily chart

Trend: Bearish