Gold consolidates gains above $3,615

Gold failed to find acceptance above the $3,660 area and is trading lower, returning to $3,620, as the US dollar appreciates for the third consecutive day, with all eyes on the US Consumer Prices Index release.

A weaker US dollar, weighed by market expectations that the Fed will cut rates later this week, keeps precious metals buoyed, with attempts contained above $3,615.

The DXY Dollar Index, which measures the greenback’s value against a basket of currencies, is trading 0.2% lower, drifting closer to two-month lows. Investors are positioning for a 25 bps Fed rate cut on Wednesday and also for a dovish turn on the interest rate projections, the so-called “dot plot” and on the bank’s forward guidance.

Gold’s consolidation pattern seen over the last few days has contributed to pulling the 4-hour Relative Strength Index down from the oversold levels seen last week, but it is still above the key 50 level.

Downside attempts have been contained above $3,615 so far. Further down, the $3,580 support (September 3 high, September 8 low) might provide some support ahead of the September 4 low, at $3,510.

To the upside, immediate resistance is the September 9 high, at $3,675. Beyond this, the psychological $3,700 level emerges as the next target, and then probably the 161.8% extension of last week’s rally, near $3,740.