Gold Continues to Tumble, Breaking Below $2,010
Today there have been two events to highlight the economic calendar; first it was the CPI inflation report from the UK, which came above expectations, giving the GBP a 100 pips push to the upside, then came the US retail sales. They were also upbeat on most fronts, which gave the US Dollar a boost too, sending Gold down toward $2,000.
Gold H4 Chart – The Decline Is Picking Up Pace
The UK data showed that services inflation remained stable in December was enough to boost the GBP for the day. This means that the Bank of England will likely remain restrictive for a bit longer, which is not good for risk assets. Then the US retail sales kept the increasing trend in December as well, posting a 0.6% increase, which is another sign that goes opposite of the market’s concept that the FED is cutting interest rates extensively this year, sooner rather than later.
Both events have boosted the respective currencies, while Gold is taking a beating once again, as sellers pile in. XAU has plummeted to the lowest level since December 13, as investors are reconsidering the Federal Reserve and other central banks’ upcoming rate cuts. Today’s US retail sales report reinforced the idea that the US economy is still doing pretty good, with the control group jumping to 0.8% vs 0.2% projected. Gold was consolidating earlier today after yesterday’s bearish reversal, but it resumed the decline and has now fallen $21 to $2006 lows, breaking below this month’s lows.
Besides this, there’s the economic downturn in China, that may also be hurting physically Gold, as jewelry buyers hold back. However, certain central banks such as the PBOC, the Russian Central Bank and other banks in the Middle East will be keen purchasers as the price falls, which will provide support for Gold.
The first major zone to watch is obviously the round level at $2000, which might offer some strong support. If not, then the December low is $1972 is the next level to watch, which was when the FED meeting took place, where Powell mentioned rate cuts for the first time. That bottom has been reached and breached on a lot of USD pairs, and I wouldn’t be shocked if Gold reached those levels too. We just opened a short term sell Gold signal after a retrace hgiher on the 5-minute chart, so we are hoping for the decline to continue.
Gold XAU Live Chart
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