• Gold price is eyeing more upside above $1,680.00 as investors have underpinned risk-on impulse.
• Robust retail demand and tight labor market are supporting the Fed to dictate a 1% rate hike.
• The DXY has slipped below 109.50 as investors have started discounting a bumper Fed rate hike.

Gold price (XAU/USD) has delivered an upside break of the consolidation formed around $1,675.00 in the early Tokyo session. The precious metal has advanced to near $1.680.00 and is preparing for a fresh rally. A decisive break above the immediate hurdle of $1,680.00 will strengthen the asset further. The bright metal has picked significant bids as the US dollar index (DXY) has witnessed a perpendicular fall at open.

The DXY has surrendered the critical support of 109.50 and has slipped further sharply. The asset has witnessed a severe weakness as investors have started discounting the bumper rate hike by the Federal Reserve (Fed). Considering the tight labor market and robust retail demand, the Fed is not tied to brisk hikes culture or maintaining the status quo. Investors should be prepared for a surprise rate hike by 100 basis points (bps) as inflationary pressures are needed to be tamed sooner.

A decline in the DXY prices has improved the risk appetite of the market participants significantly. Risk-perceived currencies and assets are picking up significant bids and are aiming sharply higher.

Gold technical analysis

Gold prices have bounced back firmly after sensing a decent buying interest around the demand zone placed in a narrow range of $1,654.17-1,660.46 on an hourly scale. The 20-and 50-period Exponential Moving Averages (EMAs) are on the verge of delivering a bullish crossover of around $1,673.00. The asset is expected to sense barricades around the horizontal resistance placed from September 7 low at $1,691.47.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which signals a continuation of bullish momentum.

Gold hourly chart