Gold Prices Lower As USD Gains Ahead of Thursday's CPI Data

Hawkish Fed Risks RemainGold prices are looking a little softer through the European morning on Tuesday as USD regains some ground. While Friday’s data saw the NFP undershooting forecasts, a move lower in the unemployment rate along with an uptick in wages means that the September meeting is still very much a ‘live’ meeting, with Thursday’s US CPI set to be the key determinant of whether the Fed hikes rates further or holds them steady. Comments from Fed’s Bowman this week regarding the need for the Fed to continue with further hikes serve as a timely reminder that hawkish risks still remain.Weak China DataUSD is seen higher today also on the back of weaker data out of China overnight. The latest China trade data showed exports falling for a third straight month, underscoring concerns for the health of the post-pandemic recovery there. Recent data flow out of China has been consistently weak leading to a wave of economic support measures from Chinese authorities though no full fiscal support package has been announced.Looking ahead, markets appear likely to remain quite muted ahead of Thursday’s CPI data. Thin summer trading and little in the way of tier one data mean this is likely to be a quieter week though Thursday holds the potential to drive plenty of volatility.Technical ViewsGoldThe failure at the 1973.51 level has seen gold prices turning lower over recent weeks. Price is now testing the rising trend line support and what looks to be the sloping neckline of a large head and shoulders pattern. Below here, 1905.46 is the next support to note ahead of deeper support at 1871.04.