Gold Traders Waiting for Tomorrow’s US CPI Report
Gold remained on a bullish trend during Q4 of last year, but it started retreating in the last few days of 2023 and it seems like this might turn into a proper downtrend, as sellers continue to keep the pressure to the downside. The recent recovery, which included a big intraday gain of roughly $40 from a two-week low, was halted as it approached the $2,062 where the 50 SMA (yellow) stood on the H4 chart.
Gold H4 Chart – The 200 SMA Is Under Attack
The bullish momentum from Q4 has stalled due to uncertainty regarding the Federal Reserve’s interest rate decrease trajectory, which influenced traders’ directional bets on the non-yielding XAU. The FED has announced that interest rates will be reduced later this year with markets expecting a March cut, however, the market’s expectations appear to be too excessive for an economy that is far from a recession and is still dealing with some sticky inflation.
So, this has been helping keep the sentiment bullish for the USD so far in 2023, as markets readjust rate cut expectations. If expectations for such a dovish policy begin to unwind, the USD will continue to remain in demand and Gold will continue to fall, which will then turn into a proper downtrend.
On the H4 chart, Gold has been finding support at moving averages, however after some time the gave up and turned into resistance, which reinforces the bearish bias. We have been trying to sell Gold against moving averages during the retreat higher, such as yesterday when XAU/USD climbed above $2,040. But, the 100 SM (green) turned into resistance and stopped the climb, so we opened a sell Gold signal during the reversal lower.
Now GOLD seems to be heading toward the $2,000 level, although there’s still quite some room to cover for sellers until reaching that major level. However, the US CPI (Consumer Price Index) inflation report which will be released tomorrow will decide whether Gold continues lower or reverses higher.
Gold XAU Live Chart
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