Gold price drops under $1930, after US PCE and UoM Consumer Sentiment. Following the release of inflation data in the United States, the price of gold declines for a second day in a row, but it is still above the low point of January 26. Two more factors contributing to Gold’s fading of its luster are the US Dollar’s (DXY) week-long decline and the increasing yields on US Treasury bonds. The XAUUSD reached a daily high of $1,935.06 and traded at $1,924.39
US Core PCE, the Fed’s inflation indicator, decreased.
Wall Street turned positive after the US Department of Commerce (DoC) reported that the Core Personal Consumption Expenditure (PCE). The inflation indicator of the US Federal Reserve (Fed), increased by 4.4% YoY in December, matching expectations but falling short of November’s 4.7% increase.
This very same data revealed that annualized headline inflation grew 5%, exceeding the Fed’s 2% objective. However, data indicated that inflation has finally started to trend down, and traders are preparing for the Federal Reserve meeting next week. There had been increasing talk that now the Fed could boost interest rates by 25 basis points (bps), that would put a stop to rate rises of more than 50 bps for the federal funds rate (FFR).
US consumer predict that inflation would decline to below 4%.
Later, the final reading of the University of Michigan’s (UoM) Consumer Sentiment survey showed an increase of 64.9 points over expectations of 64.6. Inflation expectations were revised in the University of Michigan poll, which put them at 3.9% for the coming year and 2.9% for the next five years, up from an initial estimate of 3.0%. High US Treasury bond yields put pressures.
Bond yields are still a negative factor for gold price.
US Treasury bond yields are still a negative factor for gold. The US 10-year Treasury bond yield is supporting the US dollar and has increased by roughly four basis points to 3.540%. The US Dollar Index (DXY), which measures the value of the dollar in relation to a group of six rival currencies, increased 0.22% and recaptured the 102.000 level as 102.051, is pressing XAU lately
Gold Technical Analysis.
The gold has been marginally positive this week, but a doji that has appeared following a two and half month climb from $1,616.71 to $1,949.16 implies it may be coming to an end. Further decline is now possible as long as gold price remains under Thursday’s close, but a daily close below the weekly low set on Monday at $1,911.49 is necessary to allow for a slide to $1,900. If any of that happens, the very next support level would be located at about $1,896/97, which is where the January 18 low and the 20-day Exponential Moving Average (EMA) meet. On the other hand, price regaining $1,930 would keep Gold in a range.
