At time of writing, gold was trading near 1859, sharply lower from the recent high of 1919.20 registered on June 1 on the backdrop of strength in the dollar index and recovery in global bond yields.
The US dollar index has been recovering over the last few days, trading near 90.49, which was sharply higher from the recent low of 89.54 of May 25, while the US 10-year bond yield recovered to 1.464 from the recent low of 1.428 on Friday.
On the economic data front, the preliminary-June University of Michigan US consumer sentiment index rose by +3.5 points to 86.4, which was stronger than expected for a +1.3 point increase to 84.2.
On a 3-month annualized basis, the headline May CPI rose by +8.4%, and the core CPI rose by +8.3%.
On a year-on-year basis, the May core CPI rose by +3.8% y/y, the largest increase in 29 years. A rise in inflation is likely to affect the US fed decision to unwind some of the COVID-19 related liquidity from the markets and it is negative for gold prices.
According to the CFTC Commitments of Traders report for the week ended June 8, net long for gold futures slipped by 4314 contracts to 209387 for the week. Speculative long positions dropped by 45 contracts, while shorts were added by 4269 contracts.
Gold prices are likely to face stiff resistance near $1876-$1882, while immediate support level is seen around the 50-day EMA at $1848 and 200-day EMA at $1819.