Small Gain After USD Declines

Gold is little changed in the Asia-Pac session, after closing +0.2% at $1922.30 on Monday. The gain in the precious metal was limited considering a sizeable -0.5% decline in the USD index.

• The USD's remarkable winning streak, after 8 straight weeks of gains, faced a significant challenge on Monday as the People's Bank of China intensified its efforts to protect the yuan. Meanwhile, the Bank of Japan dropped hints of a potential policy shift, causing the yen to surge in value. A strengthening dollar typically exerts a bearish pressure on gold, given that the precious metal is denominated in US currency.
• Bloomberg reports that as weakness in the yen looks set to continue into next year, prospects for gold priced in the Japanese currency have rarely looked so good. (See link)
• Gold investors are looking ahead to a US CPI report due midweek, which will help inform the outlook on the Federal Reserve’s interest-rate path.
• From a technical standpoint, bullion quickly reversed a clearance of resistance at $1930.5 (50-day EMA), according to MNI's technicals team. A more concerted push is required to open a key resistance at $1953.0 (Sep 4 high).