Gold Price Forecast: XAU/USD traders appear non-committal ahead of US CPI revisions
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CLAIM OFFER- Gold price keeps its range play intact near $2,040, with US CPI revisions eyed.
- Cautious optimism and negative US Treasury bond yields cap the US Dollar rebound
- Gold price stays hopeful while th $2,035-$2,030 support holds. RSI defends the midline.
Gold price is treading water while defending the $2,030 level in Friday’s Asian trading. Investors trade with cautious optimism ahead of the US Consumer Price Index (CPI) revisions, which could have a significant influence on the Federal Reserve’s (Fed) interest rates outlook, eventually impacting the US Dollar (USD) and the interest-rate-sensitive Gold price.
Gold price remains at the mercy of US inflation data
Ahead of next week’s January CPI inflation report from the United States, all eyes remain on Friday’s seasonally adjusted CPI revisions. The revisions are likely to emerge as the key event risks in Friday’s trading, as they will help markets reprice the Fed rate cut expectations. The data will be closely scrutinized by the Fed for affirming the disinflation trend. A large upward revision to US CPI data, a year ago, triggered a big US Dollar reaction.
Therefore, Gold traders are preferring to stay on the sidelines, refraining from placing any fresh directional bets on the bright metal. Additionally, Gold price is digesting the recent hawkish Fed commentary that pushed back against early rate cut bets, keeping the upside attempts in check.
Richmond Fed President Thomas Barkin said Thursday that they have time to be patient on rate changes and said that he needs to see good inflation numbers being sustained and broadening. Meanwhile, another strong US government bond auction on Thursday drove the US Treasury bond yields higher across the curve, inspiring Gold sellers to retain control.
However, early Friday, US Treasury bond yields came under renewed selling pressure, as fresh US-China trade tensions seem to weigh on risk sentiment while allowing Gold price to find a floor. Citing people familiar with the matter, Bloomberg reported that the Biden administration is considering an import ban on Chinese ‘smart cars’ and related components, in the face of mounting US concerns about data security.
Looking ahead, Gold price will likely remain at the mercy of the broader market sentiment, US CPI revisions and upcoming speeches from Fed policymakers. However, the end-of-the-week flows and repositioning ahead of next Tuesday’s US inflation report could trigger sharp moves in the Gold price.
Gold price technical analysis: Daily chart
The near-term technical outlook for Gold price remains more or less the same, with rangebound movement likely to extend before the US CPI revisions drop.
Gold price extends its struggle with the $2,030-$2,035 region. That level is the confluence of the 21-day and 50-day Simple Moving Averages (SMA).
The 14-day Relative Strength Index (RSI) is trading listlessly just at the 50 level, justifying the side-trend in Gold price.
Should the $2,030-$2,035 demand area guard the downside, the immediate powerful resistance for Gold price is seen at the $2,040 round level. Acceptance above the latter is needed to take on the $2,050 psychological level. The next critical resistance is envisioned at around $2,065.
On the flipside, Gold sellers yearn for a daily close below the abovementioned $2,035-$2,030 area. A breach of the last will put the $2,000 threshold at risk if the $2,010 round figure gives way.
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- Gold price keeps its range play intact near $2,040, with US CPI revisions eyed.
- Cautious optimism and negative US Treasury bond yields cap the US Dollar rebound
- Gold price stays hopeful while th $2,035-$2,030 support holds. RSI defends the midline.
Gold price is treading water while defending the $2,030 level in Friday’s Asian trading. Investors trade with cautious optimism ahead of the US Consumer Price Index (CPI) revisions, which could have a significant influence on the Federal Reserve’s (Fed) interest rates outlook, eventually impacting the US Dollar (USD) and the interest-rate-sensitive Gold price.
Gold price remains at the mercy of US inflation data
Ahead of next week’s January CPI inflation report from the United States, all eyes remain on Friday’s seasonally adjusted CPI revisions. The revisions are likely to emerge as the key event risks in Friday’s trading, as they will help markets reprice the Fed rate cut expectations. The data will be closely scrutinized by the Fed for affirming the disinflation trend. A large upward revision to US CPI data, a year ago, triggered a big US Dollar reaction.
Therefore, Gold traders are preferring to stay on the sidelines, refraining from placing any fresh directional bets on the bright metal. Additionally, Gold price is digesting the recent hawkish Fed commentary that pushed back against early rate cut bets, keeping the upside attempts in check.
Richmond Fed President Thomas Barkin said Thursday that they have time to be patient on rate changes and said that he needs to see good inflation numbers being sustained and broadening. Meanwhile, another strong US government bond auction on Thursday drove the US Treasury bond yields higher across the curve, inspiring Gold sellers to retain control.
However, early Friday, US Treasury bond yields came under renewed selling pressure, as fresh US-China trade tensions seem to weigh on risk sentiment while allowing Gold price to find a floor. Citing people familiar with the matter, Bloomberg reported that the Biden administration is considering an import ban on Chinese ‘smart cars’ and related components, in the face of mounting US concerns about data security.
Looking ahead, Gold price will likely remain at the mercy of the broader market sentiment, US CPI revisions and upcoming speeches from Fed policymakers. However, the end-of-the-week flows and repositioning ahead of next Tuesday’s US inflation report could trigger sharp moves in the Gold price.
Gold price technical analysis: Daily chart
The near-term technical outlook for Gold price remains more or less the same, with rangebound movement likely to extend before the US CPI revisions drop.
Gold price extends its struggle with the $2,030-$2,035 region. That level is the confluence of the 21-day and 50-day Simple Moving Averages (SMA).
The 14-day Relative Strength Index (RSI) is trading listlessly just at the 50 level, justifying the side-trend in Gold price.
Should the $2,030-$2,035 demand area guard the downside, the immediate powerful resistance for Gold price is seen at the $2,040 round level. Acceptance above the latter is needed to take on the $2,050 psychological level. The next critical resistance is envisioned at around $2,065.
On the flipside, Gold sellers yearn for a daily close below the abovementioned $2,035-$2,030 area. A breach of the last will put the $2,000 threshold at risk if the $2,010 round figure gives way.
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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