On Tuesday, gold(XAUUSD) bulls will perform one more dance, boosting the price of gold from six-week lows of $1,850. Investors are preparing for the week’s major event risk, the all-important United States Consumer Price Index data for January.
Hot US Consumer Price Index may support hawkish Federal Reserve wagers.
The US Consumer Price Index data has been the most important market mover in the last year, since its conclusion is crucial in determining the US Federal Reserve’s next monetary policy move. The annualized US Consumer Price Index is expected to be 6.2% in January, down from 6.5% in December.
The Core CPI is forecast at 5.5% YoY in January, down from 5.7% the prior month. On a monthly basis, the American CPI is predicted to rise to 0.5% in January, up from 0.1% before. The Core CPI statistic is expected to remain stable at 0.4% in the reporting period.
The US Dollar would need to rise by an unmistakably large 0.6% number. A negative 0.3% number or less would send it.” The market is expecting a clear reaction to the publication of US CPI data, and for gold, a hotter-than-expected monthly result is likely to bring disaster, as it would strengthen hawkish Fed rate rise predictions. Rate rises of 25 basis points (bps) are already priced in for March and May. Hot US CPI Data likely to delay expectations of a Federal Reserve rate drop this year. The Fed’s target rate is expected to peak at 5.195% in July, up from a current range of 4.5% to 4.75%.
Gold(XAUUSD) Technical Analysis
With a Bear Flag in place, the gold price fell below the crucial 50-Daily Moving Average (DMA), presently at $1,859.
At the time of writing, gold buyers were defending the critical $1,850 support level. The 14-day Relative Strength Index (RSI) continues below 50.00, indicating that the gold price is bearish.
A strong US Consumer Price Index reading might spark a new downturn in the yellow metal, breaking below the previously indicated support. On sustained selling, gold bears will aim for the January 5 low of $1,825 per ounce.
If US inflation data revives the Federal Reserve’s dovish perspective, gold bulls will be energized to pursue a rebound towards the $1,870 supply zone.
The following upward objective the February 9 high of $1,890 is expected. The bullish crossover of the 100 and 200-day moving averages may assist to alleviate the agony in the gold market.
