Gold - Sell-off stalls ahead of June lows as traders eye the US CPI

• A strong inflation number could send it lower again
• Major support zone below

Gold appears to be stabilizing a little ahead of the US CPI report, with traders paying close attention to the outcome as it could ultimately determine whether the yellow metal breaks the June lows or rebounds higher.

Prices have been pressured by rising yields and a stronger dollar recently as traders have pushed back expectations around rate cuts for next year. While they appear confident that the Fed is done with tightening - for now - they're less sure we'll see the kind of easing that they were so convinced of earlier in the year.

Another promising CPI release could change that and so today really is quite significant. There's still a long way to go but the US has made significant progress, even at the core level, and more is expected over the rest of the year. If it can do so at a more accelerated rate than currently envisaged then gold could prosper.

A key zone of support

The June lows not only represent a prior area of support, they also combine with the 200/233-day simple moving average band to create a potentially significant technical zone.

XAUUSD Daily

Source - OANDA on Trading View

A move below here could be viewed as particularly bearish as it would indicate the recovery earlier in July was merely a corrective move. That said, a failure to make new lows would also be interesting as it may signal that the recent weakness was only temporary and traders are defending that support zone. Of course, much may depend on the data we see over the coming weeks.