Gold (XAU/USD) Sees Modest Uptick Amid Mixed Global Cues and USD Pullback
In the Asian trading session on Thursday, GOLD (XAU/USD) exhibited a slight uptick, seemingly halting its two-day decline to a one-month low witnessed the previous day. The US Dollar (USD), experiencing a minor retreat from its peak since December 13, primarily due to some profit-taking, has inadvertently boosted the appeal of the precious metal.
However, escalating military conflicts in the Middle East and persistent concerns about China’s economic slowdown—the globe’s second-largest economy—are exerting pressure on investor sentiment. This atmosphere of uncertainty is contributing to the allure of gold as a safe-haven asset.
Despite this, a substantial recovery in the GOLD market remains elusive. Market participants are adjusting their expectations regarding the Federal Reserve’s policy trajectory, especially following the release of the robust US Retail Sales data on Wednesday.
This data, indicating a resilient American economy, has reduced the likelihood of an immediate interest rate cut in March. As a result, US Treasury bond yields remain high, bolstering the strength of the USD.
Therefore, investors might consider waiting for more significant buying interest before concluding that XAU/USD has reached a near-term base.
Thursday’s modest dip in the US Dollar, combined with geopolitical tensions and China’s economic challenges, is providing some support for gold prices around the crucial $2,000 level. The recent claim by Yemen-based Houthi rebels of attacking a US-operated vessel in the Red Sea, along with their threat of escalating attacks in retaliation to American and British strikes, adds to the market’s cautious tone.
Additionally, China’s economy, despite surpassing its 5% annual growth target in the final quarter of 2023, continues to face deflationary risks and soft demand, which are concerning investors.
Wednesday’s US Retail Sales data further underscored the strength of consumer spending and the US economy’s resilience. The data showed a 0.6% increase in headline sales in December, surpassing market expectations, with core sales – excluding autos – also exceeding forecasts. This data suggests that the Federal Reserve might have more leeway to maintain higher interest rates for an extended period.
Moreover, Fed Governor Christopher Waller’s recent remarks emphasized the need for a cautious approach in reducing interest rates, advocating for a clear and sustained decline in inflation before any rate cuts.
The yield on the benchmark 10-year US government bond, maintaining levels comfortably above 4%, near its highest since mid-December, continues to offer support to the USD.
As traders await the release of the US Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and housing market data on Thursday, these factors are expected to provide fresh direction for the gold market.
Gold Technical Outlook:
Yesterday, GOLD prices closed below the 2016.90 level, reinforcing the bearish trend on an intraday basis and setting the stage for a potential move towards the 1977.46 support level. The EMA50 is exerting downward pressure, aligning with the bearish outlook.
The bearish channel’s continuation adds to the strength of this downward trend. A break of the 2016.90 and 2025.20 resistance levels is needed to end this bearish scenario and possibly start a recovery towards the 2065.70 area.
Today’s expected trading range is between the 1990.00 support level and the 2025.00 resistance level, with the trend for the day anticipated to be bearish.
Gold XAU Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals