Gold (XAUUSD) is trading down on Friday ahead of US inflation data, gold price aiming for a flat week close after reaching a nine-month high on Thursday.
The gold price surge has stalled as the US dollar and US Treasury bond rates have recovered.
The US Dollar (USD) is gaining ground with US Treasury note rates, with attention now moving to the US (PCE) Price Index data. For the second day in a row, the US Dollar Index is attempting to reclaim the 102.00 level against its main counterparts. The three-day rebound in US Treasury bond rates is supporting sentiment surrounding the US Dollar ahead of December (PCE) Price Index data. The chosen inflation indicator of the United States Federal Reserve (Fed) will be made available later in the day, around 13:30 GMT.
Economists anticipate that core PCE inflation, excluding volatile items like as food and energy costs, will climb 0.2% on a monthly basis, with an annualized rate of 4.4% in the reporting period. Inflationary pressures in the United States may ease, raising the prospect of lower US Federal Reserve rate rises in the future, or perhaps a Fed pause after the first quarter. “Given the market posture, there is minimal room for additional US Dollar weakening in case PCE Pricing Index readings reflect the lessening of price pressures. It’s also worth mentioning that investors are unlikely to make huge bets just a few days before the first FOMC policy meeting.
US GDP beat, all eyes are on the Federal Reserve’s favored inflation statistics.
The first estimate of US GDP figures for the fourth quarter beat predictions of 2.6% to arrive at 2.9% YoY vs. 3.2% before. Fears of a recession were alleviated slightly with the release of US economic statistics, sparking a risk rally as US tech stocks rose amid greater chances of a gentle landing. The US Dollar saw significant volatility in response to a slew of US economic data releases, but it remained steadfast, sustaining its rebound from eight-month lows,. Which impacted hard on the USD-denominated Gold price. Among other high-level US data, weekly jobless claims declined by 6,000, to 186,000, the lowest amount since April 2022. The US Durable Goods Orders numbers were also significantly higher than predicted, jumping 5.6% in December vs the 2.4% projected.
Gold Technical Outlook
An upside fadeout from a rising wedge formation on Tuesday, bears grabbed control and sparked a corrective slide in the Gold price on Friday. As a result, gold completed the day below the lower border of the wedge, at $1,940, confirming a rising wedge collapse.
The rising wedge’s inherent inclination is to produce a downward break, which finally occurred on the announcement of the United States Gross Domestic Product. To test the weekly low at $1,911, gold sellers must break through a sturdy support at $1,918. If the gold price continues to fall, the $1,900 round barrier may be threatened.
However, with the 14-day Relative Strength Index (RSI) in positive territory above the midline, the gold price remains stable. On pullbacks, there is still a strong purchasing opportunity. On the upside, strong resistance at the crucial $1,950 level remains a difficult nut to crack for Gold bulls. Prior to that, the gold price must regain acceptability over the $1,940 round number.
A sustained break over the $1,950 level will need a test of the next resistance level, which is located near the highs of April 20, 2022.
