Daily Price Outlook
Gold prices (XAU/USD) remained under pressure around 2,754 level. However, the bullish US dollar, backed by the rebound in US Treasury bond yields, has played a major role in undermining the gold price.
At the same time, the equity markets have been flashing green, which was seen as another key factor that put downward pressure on gold.
Moreover, US inflation data indicates a slowdown, sparking hopes that the Federal Reserve may cut interest rates twice this year. Such a move could weaken the USD and Treasury yields, which might provide some support to gold in the future. In the meantime, the ongoing uncertainty remains, especially around US President Donald Trump’s tariff policies.
US Dollar Strength and Economic Data Impact on Gold Prices
On the US front, the broad-based US Dollar Index (DXY), which measures the dollar’s strength against six major currencies, remains above 108.00. The dollar gained support after President Donald Trump directed federal agencies to investigate trade deficits, potentially influencing economic policies.
Traders are also keeping an eye on Friday’s key data releases, including the preliminary US S&P Global PMI and Michigan Consumer Sentiment Index, as these will provide insight into the economy's near-term outlook.
However, the US Dollar will likely strengthen further as traders expect the Federal Reserve (Fed) to maintain its interest rate in the 4.25%-4.50% range during its January meeting. Trump’s trade policies might also create inflationary pressures, which could limit the Fed to only one more rate cut.
On the data front, US Retail Sales increased by 0.4% month-over-month in December, reaching $729.2 billion. However, this was weaker than the expected 0.6% rise and lower than November's revised growth of 0.8%.
Inflation data also showed mixed results. The Consumer Price Index (CPI) rose 2.9% year-over-year in December, up from 2.7% in November, matching market expectations.
On a monthly basis, CPI rose by 0.4%, slightly higher than the 0.3% increase in November. Core CPI, excluding food and energy prices, grew 3.2% annually, just below November’s 3.3%, indicating easing price pressures in certain areas.
Therefore, the strengthening US Dollar, supported by inflation data and the Fed's stance, could pressure Gold prices lower. A stronger dollar typically makes Gold more expensive for foreign buyers, reducing demand and potentially pushing Gold prices downward.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) are currently trading at $2,752.57, down 0.14%, as the metal consolidates within a tight range, reflecting cautious sentiment among traders.
The pivot point at $2,747.06 serves as a critical level, with prices holding just above it, suggesting a potential bullish reversal if support remains intact.
Immediate resistance is seen at $2,763.39, with further hurdles at $2,780.59 and $2,797.39, which could challenge upward momentum in the near term.
On the downside, gold finds immediate support at $2,732.46, followed by a deeper safety net at $2,716.46 and $2,701.66. A breach below these levels may signal a bearish shift, increasing selling pressure.
The 50-day Exponential Moving Average (EMA) at $2,727.20 currently provides solid support, reinforcing the prevailing uptrend. A sustained move above the pivot point could encourage fresh buying interest, potentially driving prices toward higher resistance zones.
Technical indicators suggest a cautiously optimistic outlook, with the price action maintaining a bullish bias above the 50-day EMA.
However, market participants remain watchful of macroeconomic factors, including interest rate expectations and geopolitical developments, which could influence gold's trajectory.
Conclusion: A buying opportunity emerges above $2,747, with a target of $2,769 and a stop loss at $2,732. Traders should monitor key resistance and support levels closely for directional cues.
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