On Tuesday, the dollar gained ground across the board as the publication of explosive U.S. inflation statistics sparked widespread rumors that the Federal Reserve would raise interest rates aggressively at its upcoming meeting to combat inflation
As increases in the cost of rent and food offset declines in gasoline prices in August, consumer prices in the US unexpectedly increased. This has given the Fed a permission to deliver another sizable interest rate hike next Wednesday.
CPI rose 0.1% in August after being the same in July. The CPI grew 8.3% over the past year, through August. From the 8.5% increase in July, that was a slowdown. In June, the annual CPI reached its highest point since November 1981, peaking at 9.1%.
Gold fell below the support of $1,700 and reached the low of $1,697 and is currently consolidating in a narrow range of $1,700 – $1,703 during the Asian session on Wednesday and poised to continue its downside trend.
Looking at the 30-minute chart, immediate resistance is seen at $1,703 where a break above this level can push prices towards $1,710 to $1,720.
Support is seen at $1,697 when breached will drag prices to $1,690 and finally $1,680. It is also important to note that a break of $1,676.91 low of March 2021 will confirm a large double top pattern on the monthly chart.