- Gold price retreats from a nine-month high as bulls opt to take some profits off the table.
- Bets for smaller rate hikes by Federal Reserve weigh on US Dollar and should limit losses.
- Looming recession risk might further lend some support to the safe-haven precious metal.
Gold price edges lower on Wednesday and moves away from a nine-month high, around the $1,942-$1,943 area touched the previous day. The XAU/USD remains on the defensive through the first half of the European session and is currently placed near the daily low, just below the $1,925 level, down nearly 0.70% for the day.
Bets for smaller rate hikes by Federal Reserve to benefit Gold price
The intraday downtick witnessed around the Gold price lacks any obvious fundamental catalyst and could be attributed to some profit-taking. That said, firming expectations for a less aggressive policy tightening by the Federal Reserve (Fed) could offer some support to the non-yielding yellow metal. In fact, the markets seem convinced that the Fed will soften its hawkish stance amid signs of easing inflationary pressures in the United States (US).
Softer US Dollar might further lend support to Gold price
The CME's FedWatch Tool points to over a 90% probability for a smaller 0.25 bps rate hike at the next Federal Open Market Committee (FOMC) meeting that concludes on February 1. This will mark a further moderation in the pace of the rate-hike cycle, which keeps the US Dollar on the defensive near a nine-month low. A softer Greenback might turn out to be another factor that should help limit losses for the US Dollar-denominated Gold price.
Recession fears also favor XAU/USD bulls
Apart from this, the prevalent cautious mood could further act as a tailwind for the safe-haven Gold price. The recent optimism over the easing of strict COVID-19 restrictions in China remains capped amid looming recession risks. According to the latest report by World Bank, the global economy is now in its steepest slowdown following a post-recession recovery since 1970. This, in turn, takes its toll on the risk sentiment.
Focus on key macro data from United States
The aforementioned fundamental backdrop supports prospects for the emergence of some dip-buying around the Gold price. Bulls, however, seem reluctant and prefer to move to the sidelines ahead of this week's important US macro releases, including the Advance Q4 GDP print. This, along with the US Personal Consumption Expenditures (PCE) Price Index, will influence the Fed's interest rate strategy and provide a fresh directional impetus to the XAU/USD.
In the meantime, the USD price dynamics, the US bond yields and the broader risk sentiment will be looked upon for short-term opportunities in the absence of any relevant economic data from the US. Nevertheless, it will still be prudent to wait for strong follow-through selling before confirming that the Gold price has topped out in the near term and positioning for a deeper corrective pullback.
Gold price technical outlook
From a technical perspective, the $1,920 resistance breakpoint is likely to act as immediate support for the Gold price and protect the immediate downside. Any further decline might attract some buyers around the $1,911-$1,910 area, which should help limit losses near the $1,900 round figure. The latter should act as a pivotal point. A convincing break below might shift the near-term bias in favour of bearish traders and pave the way for some meaningful downside.
On the flip side, the $1,942-$1,943 region might continue to act as an immediate barrier for Gold price ahead of the $1,969-$1,970 zone. This is followed by the $1,980 barrier, above which bulls could aim to reclaim the $2,000 psychological mark for the first time since March 2022.
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD bounces off lows, retests 1.1370
Following an early drop to the vicinity of 1.1310, EUR/USD now manages to regain pace and retargets the 1.1370-1.1380 band on the back of a tepid knee-jerk in the US Dollar, always amid growing optimism over a potential de-escalation in the US-China trade war.
GBP/USD trades slightly on the defensive in the low-1.3300s
GBP/USD remains under a mild selling pressure just above 1.3300 on Friday, despite firmer-than-expected UK Retail Sales. The pair is weighed down by a renewed buying interest in the Greenback, bolstered by fresh headlines suggesting a softening in the rhetoric surrounding the US-China trade conflict.
Gold remains offered below $3,300
Gold reversed Thursday’s rebound and slipped toward the $3,260 area per troy ounce at the end of the week in response to further improvement in the market sentiment, which was in turn underpinned by hopes of positive developments around the US-China trade crisis.
Ethereum: Accumulation addresses grab 1.11 million ETH as bullish momentum rises
Ethereum saw a 1% decline on Friday as sellers dominated exchange activity in the past 24 hours. Despite the recent selling, increased inflows into accumulation addresses and declining net taker volume show a gradual return of bullish momentum.
Week ahead: US GDP, inflation and jobs in focus amid tariff mess – BoJ meets
Barrage of US data to shed light on US economy as tariff war heats up. GDP, PCE inflation and nonfarm payrolls reports to headline the week. Bank of Japan to hold rates but may downgrade growth outlook. Eurozone and Australian CPI also on the agenda, Canadians go to the polls.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.