- Since the start of trading this week, the price of gold XAU/USD has been on an upward trajectory, stabilizing around the resistance level of $2,037 per ounce at the time of writing the analysis.
- The halt in the gains of the US dollar and the continued global geopolitical tensions are still factors that are providing positive momentum for gold bulls.
On the US dollar front, performance and influencing factors. Valentin Marinov, currency analyst at Credit Agricole Bank, says, “The high-yielding safe-haven US dollar has regained its strength across the board recently, as the coordinated pressure from central banks against overly cautious market expectations is finally starting to pay off.” He added, “The rise in US and global yields has weighed on risky assets, leading to a tightening of global financial conditions, which has polished the currency's appeal as a safe haven.”
Most importantly, he says that this trade that supports the dollar is still ongoing. He added, “With US interest rate markets continuing to give a roughly 50% chance of a US Federal Reserve rate cut in March and pricing in roughly 130 basis points of rate cuts in 2024, we believe that the reassessment of cautious market expectations is not over yet.”
The local focus on the US dollar this week is on Thursday with the release of GDP and the personal consumption expenditures inflation measure. Moreover, the US core personal consumption expenditures reading for December is the last major release ahead of the Federal Reserve policy meeting on January 31, so it could attract significant attention from investors and markets.
In a weekly currency briefing, Credit Agricole's Marinov said investors should focus on the risks of any negative data surprises given that the latest US producer price index data came in on the weaker side and given that shelter costs – one of the main drivers of the US core consumer price index. Also, the surprise of upside inflation in December – entered the core personal consumption expenditures with a smaller weight.
Moreover, with many Fed-related negatives still baked into the US dollar rate, it will take notable downward inflationary surprises to put pressure on the currency before the Fed's policy meeting in January, according to the analyst. In fact, Credit Agricole economists note that recent economic data indicates that the US labor market remains tight and continues to fuel wage growth and thus domestic demand while the US disinflation process appears to have stalled in December.
Gold Price Forecast and Analysis Today:
According to the performance on the daily chart above, the general trend for the gold price As we recommended before, we still prefer to buy gold from every falling level. Currently, the closest support levels for gold are 2018 and $2000, respectively. On the other hand, over the same time period, the most prominent resistance levels for gold will currently be 2055 and 2070 dollars per ounce, respectively.
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