GOLD PRICE FORECAST: US INFLATION DATA TO SHAPE TRENDS; XAU/USD LEVELS AHEAD
Gold (XAU/USD) has oscillated between technical barriers around $2,065 and horizontal support near $2,005 since the start of the year.
NEWS
2/12/20242 min read
GOLD PRICE FORECAST: US INFLATION DATA TO SHAPE TRENDS; XAU/USD LEVELS AHEAD
GOLD PRICE ANALYSIS
Gold prices have remained indecisive in 2024, experiencing a consolidation phase amid awaiting fresh market drivers.
Next week's release of US inflation data is anticipated to introduce volatility and provide direction for precious metals in the short term.
This report evaluates the technical outlook for XAU/USD, examining critical price levels to monitor in the upcoming trading sessions.
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Gold (XAU/USD) has oscillated between technical barriers around $2,065 and horizontal support near $2,005 since the start of the year. While the bullish outlook appeared more favorable previously, the recent indication from the Federal Reserve of maintaining interest rates has paused the bullish momentum for now.
Should interest rates remain elevated or even increase further, assets like precious metals, which do not yield dividends, may struggle to advance. With current attention on interest rate projections, the Federal Open Market Committee's (FOMC) monetary policy direction is expected to significantly influence market dynamics in the near future.
The Fed, wary of previous false signals and cautious of complicating efforts to stabilize prices, has refrained from immediate rate cuts. This stance could be reinforced if the upcoming release of the consumer price index (CPI) report next week shows limited progress in reducing inflation.
Forecasts suggest that January's headline CPI may have moderated to 3.1% year-on-year (y-o-y) from December's 3.4% y-o-y. Conversely, the core CPI, indicating long-term and underlying price trends, is expected to ease slightly to 3.8% y-o-y from the previous 3.9% y-o-y.
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Potential outcomes suggest that any unexpected increase in CPI figures, particularly in core metrics, may bearish for gold. This scenario could lead traders to revise their dovish interest rate expectations, increasing yields and strengthening the US dollar. Conversely, lower-than-expected inflation readings could boost gold prices, potentially prompting markets to anticipate an earlier rate cut.
GOLD PRICE TECHNICAL ANALYSIS
Gold prices (XAU/USD) exhibited subdued movement around the 50-day simple moving average at $2,035 on Wednesday, indicating a consolidation phase awaiting significant market developments. The consolidation is likely to persist until prices either surpass resistance at $2,065 or breach support at $2,005 convincingly.
A breakout above resistance could target $2,085, with further gains possibly aiming for the all-time high near $2,150. Conversely, a breach of support may trigger a pullback towards $1,990, with potential additional losses eyeing the 200-day simple moving average around $1,995.