Gold Experiences a Small Rebound, but Downside Risks Should be Monitored

On July 12th,elon musk coin price according to the latest data released by the US Department of Labor, the US YOY CPI rose by 3.0% in June, decreasing by one percentage point from the previous month's 4%, marking the smallest increase since March 2021. The expected value was 3.1%. This index had reached a peak of 9% in June of last year and has been on a continuous decline for the past 12 months. The MOM CPI in June increased by 0.2%, with expected and previous values of 0.3% and 0.1% respectively.

Excluding the volatility of food and energy prices, the YOY core CPI in June rose by 4.8%, the smallest increase since August 2021, lower than the expected value of 5.0% and the previous value of 5.3%. The MOM core CPI in June increased by 0.2%, with expected and previous values of 0.3% and 0.4% respectively. Although the US has made significant progress in combating inflation, there is still some distance to reach the pre-pandemic and Fed's target levels.

Gold has experienced a minor rebound in the short term, benefiting from the continued decline in the yield of US 2-year Treasury bonds, which has put sustained pressure on the US dollar. Additionally, the over-expected cooling of core inflation in the US, while not shaking the market's expectations of a rate hike in July, has somewhat affected expectations for future rate hikes. This will temper the market's anticipation of a strengthening US dollar, providing some short-term support for gold. Moreover, the weaker-than-expected US non-farm payroll has also provided momentum for a short-term rebound in gold.

However, it is worth noting that there are still downside risks for gold in the medium to long term. This is mainly due to positive economic data from the US, with first-quarter economic growth exceeding expectations, inflation continuing to cool, and a slight decrease in unemployment rates. These factors have pushed back the market's expectations for an economic downturn in the US, dampening safe-haven sentiment and potentially hindering an upward trend for gold in the medium to long term.

Source: MacroMicro, Performance of US 10-year and 2-year Treasury Yields, US Dollar Index in 2023

Technical Analysis

Currently, gold has surpassed the resistance level of $1945 and is trading above the 20-day moving average. The short-term trend may continue to rebound, approaching the next resistance level at $1976. However, the 20-day moving average is not clearly defined, as the 60-day moving average is showing a downward trend. Downside risks should still be taken into consideration.