• Gold price is looking for an establishment above $1,650.00 as the risk-off profile fades.
• Escalating odds for a fourth consecutive 75 bps rate hike by the Fed are supporting the DXY.
• The Fed is bound to hike rates to a bigger extent as inflation hasn’t responded well yet.

Gold price (XAU/USD) has witnessed an intermittent hurdle while surpassing the 1,652.00 hurdle in the Tokyo session. Earlier, the gold prices witnessed a vertical rally from around $1,640.00 as the risk-on profile emerged. S&P500 has turned sideways but is keeping its morning gains, which indicates that the risk appetite has not faded yet. Also, the 10-year US Treasury yields are oscillating below the psychological figure of 4%.

The US dollar index (DXY) has picked bids after a downside move below 113.00 as investors are shifting their funds back into the safe-haven amid soaring bets for a 75 basis point (bps) rate hike by the Federal Reserve (Fed). As per the CME FedWatch tool, chances of an increment in the interest rates by 75 bps consecutive for the fourth time stand at 97.4%. As price pressures are not responding well in line with expectations, the Fed will continue to accelerate interest rates.

Last week, the headline US Consumer Price Index (CPI) and core CPI that excludes the impact of food and oil prices landed higher at 8.2% and 6.6% than their expectations. Continuous efforts from the Federal Reserve (Fed) to contain the mounting price pressures are failing. Therefore, a continuation of bigger rate hikes seems necessary to achieve price stability.

Gold technical analysis

Gold prices have witnessed a rebound after witnessing exhaustion in the downtrend. It is worth noting that the asset was continuously making lower lows while the momentum oscillator, Relative Strength Index (RSI) (14) made a higher low. This indicates signs of a loss in the downside momentum.

The precious metal has also poked the 20-period Exponential Moving Average (EMA) at $1,651.13, which indicates signs of reversal but still needs more filters.

Gold hourly chart