Gold steady on Thursday, holds the $1,910 level heading into Friday

The XAU/USD briefly dipped to new three-week lows during Thursday’s market session before recovering to close the day in the green just above $1,910.00.

Gold tipped to the low side through the Thursday session, testing $1,901.00 before rallying on better-than-expected US economic data and a dovish European Central Bank (ECB) that couldn’t get enough powder into the barrel for what might well be the ECB’s last rate hike for the foreseeable future.

US data beats keep inflation expectations low, help bolster Gold

Thursday saw US Producer Price Index (PPI) figures beat expectations, printing at 0.7% for the month of August versus the forecast 0.4%, and coming in above the previous month’s revised 0.4% increase (pre-revision: 0.3%). Despite the rising inflationary pressure from the PPI printing, much of the headline gain was from rising gasoline and energy prices, with the core PPI (excluding food and energy prices) figure coming in at expectation at 0.2%, down from the previous month’s 0.4%.

Retail Sales in the US also showed a healthy uptick, printing at 0.6% for August compared to the previous 0.5% and well above the forecast 0.2%. The US’ economy appears to be on track to mostly avoid or entirely avert a soft landing in the fourth quarter of 2023, though inflation expectations remain tepid. Thanks to this, Gold got a chance to recover some recently lost ground.

The ECB’s rate hike early Thursday did little to inspire confidence in the broader markets, with the ECB President Christine Lagarde noting that this could very well be the end of the rate hike cycle for the ECB. Investor risk appetite got knocked lower on the dovish showing from the ECB, and markets are now anticipating no further rate hikes from the ECB, with a rate cut now expected in March of next year.

Friday will see more data from the US, with the Michigan Consumer Sentiment Index due at 14:00 GMT, which is expected to soften slightly from 69.5 to 69.1.

XAU/USD technical outlook

Despite Thursday’s bullish rebound, Gold remains firmly on the downside and looking for a relief rally. A turnaround from this region on the daily candlesticks will see the XAU/USD chalk in a higher low from August’s swing low near $1,890.00, but a firm pattern of lower highs and a descending trendline from May’s peak above $2,050.00 continues to apply bearish pressure.

The 100-day Simple Moving Average (SMA) sits above current prices near $1,950.00, and a flattening 50-day SMA is providing further dynamic resistance just above $1,930.00.

XAU/USD daily chart

XAU/USD technical levels