- Summary:
- Gold price has slid below the $2,000 psychological support at the futures market as the USD gains from a forecast-beating US inflation data.
XAUUSD lost further ground, trading at two-month lows, as the US dollar rose further, propelled by Tuesday’s US consumer inflation data. Gold spot price was going at $1,989.25 an ounce while gold futures broke the $2,000 psychological support before settling at $2,000.3 at 8.50 UTC at the COMEX market.
The Core Consumer Inflation figures released by the US Bureau of Labor and Statistics on Tuesday showed that the country’s economy is still heating up. Both the Month-on-Month and Year-on-Year Core CPI for January beat expectations, with the former printing at 0.4% against a projected 0.3% and the latter coming at 3.9% versus the projected 3.7%. This has added impetus to the view that the Federal Reserve is unlikely to cut interest rates in March.
High Treasury yields, too, but China could come to the rescue
Adding to the downward pressure on gold prices are high US Treasury yields, which stood near two-and-a-half-month highs early Wednesday. Rates on 10-year bonds were at 4.29%, while 5-year rates were at 4.27% at the time of writing. Gold will have to wait a little longer for the Chinese New Year holiday to come to an end to get cues on potential inflows from China’s economy.
The world’s second-largest economy faces headwinds, with its stock markets trading near five-year lows. Altogether, China’s stock markets have seen about $6 trillion of their value wiped out over the last three years. Furthermore, things seem to be worsening, with the country’s property market in a major crisis. Therefore, safe haven gold could provide an escape route to investors seeking opportunities elsewhere.
Technical Analysis
Gold has found pivot at 2003.00, with the RSI on the 30-minute chart signaling further downward slides. With the $2,000.00 psychological support having been breached momentarily, gold price will likely head below the $2,003.00 pivot level, with the first support coming at $1,985.00. Further control by the sellers could see the price settle lower, with the second support at $1,975.00. Alternatively, the commodity will need to spend more time above $2,003.00 to build upside momentum. That could see XAUUSD test the first resistance at $2,012 and possibly head further up to $2,021.00.
Gold price 30 minute chart