gold price is returning to multi-week lows below $1,850.
A strong two-way trading session after the release of the crucial US Consumer Price Index (CPI) data on Tuesday, the price of gold(XAUUSD) is currently resumed its downward trajectory below $1,850.
US Consumer Price Index boosted hawkish Federal Reserve bets.
Investors anticipate the US Retail Sales data and US Federal Reserve speech for new trade cues. The US Dollar is regaining demand as it attempts to continue its comeback in the face of widespread risk aversion. The resurgence of the US dollar is bad news for gold with a USD price. Investors are preparing for another top-tier United States economic data release, in the shape of Retail Sales, which will provide new information on consumer spending.
The decline in US Treasury bond rates appears to have limited the decline in the price of gold. Economic expenditure will ultimately provide hints about the direction of the economy and inflation.
In January, it is anticipated that US retail sales would improve to 0.8% MoM from -1.1% in December, and that US core retail sales will similarly increase to 0.8% from -1.1%.
Strong consumer demand at the beginning of this year is probably going to raise inflation expectations, increasing the likelihood that the US Federal Reserve will keep tightening its monetary policy. President of the Dallas Federal Reserve Lorie Logan stated on Tuesday that the Fed would continue to raise rates as long as US inflation remains high. Both John Williams of the New York Fed and Patrick Harker of the Philadelphia Fed held rather hawkish opinions about the direction of future policy. United States Consumer Price Index (MoM) (Jan) increased by 0.5%, compared to 0.5% anticipated and 0.1% before.
The United States Consumer Price Index affects the price of gold.
The US Consumer Price Index excluding Food and Energy (MoM) for January remained constant at 0.4%. US Consumer Price Index (Jan) dropped to 6.4% on an annualized basis, down from 6.2% anticipated and 6.5% before. Compared to expectations of 5.5% and 5.7%, the US Core Consumer Price Index inched down to 5.6% YoY in January. Hot US CPI data caused a mixed response in the US Dollar globally, but as investors processed the information, the American Dollar began to gain ground once more.
The price of gold is in a state of limbo as a result of a sudden reversal in US Treasury bond rates, which finished Tuesday with significant increases. The peak Fed funds fund rate of 5% to 5.25% by July is currently priced into Fed funds futures.
Gold(XAUUSD) Technical Analysis
Gold sellers have established a firm foothold after two days in a row of closing below the crucial 50-Daily Moving Average (DMA), now around $1,860.
Should the previous day’s low fail to hold, the next downward target is thus projected at the falling trendline support around $1,838.
Additional falls might put bullish commitments in jeopardy around the $1,825 horizontal trendline support from the low on January 5.
There may yet be more room for the price of gold to decline as the 14-day Relative Strength Index (RSI) is pointing south below the 50.00 mark.
Alternatively, for Gold bulls to start any significant comeback into the $1,870 supply zone, recapturing the 50DMA support that is currently resistance is essential.
A challenge of the February 9 high at $1,890 will be inevitable if the recovery gathers steam.
