Gold turned bullish last month after declining since July and made some huge increases due to tensions in Gaza, pushing the price beyond the important round mark of $2,000. Gold retreated lower early this month as geopolitical issues didn’t spread further in the Middle East. However, after this week’s weak inflation figures from the US, the attitude has shifted and buyers are back in control.

Weakening data in the US is the main reason behind the recent drop in the US dollar and yields. Whilst the economy continues to show robustness and the recession seems far away now, the softer jobs and inflation data have increased the odds that there will be no more rate hikes from the Federal Reserves, even bringing forward expectations about rate cuts. Traders are now pricing in 22bps of cuts by May, and then cutting further by over 50bpGolds as 2024 progresses.

This week XAU/USD continued higherGold again due to a weaker dollar and on Friday’s European session it climbed to $1,993 but retreated lower and closed the week at around $1,980 which shows that GOLD buyers are a bit wary of keeping their positions open as the price approaches $2,000.

Another factor to bring the price surge to a halted were the hawkish remarks from Federal Reserve (Fed) officials on Friday, following the release of solid US housing statistics, which fuelled a modest rise in US bond rates, with th 10-year bond yields above 4.40% again.

Susan Collins, President of the Boston FED, indicated on Friday that she sees indications that financial conditions remain favorable for the FED and welcomes the recent drop in inflation. However, she then suggested that she would not rule out more firming in case it is needed, which seemed to frighten markets, although I don’t think we will see more hikes coming up. Nonetheless, Gold retreated and we followed the price to open a buy Gold signal at the 50 SMA (yellow) on the H1 chart, which has been acting as support this week.

Gold Live Chart