Gold Price Moves Up Within A Multi-day-old Trading Range As Traders Await US CPI – Mudcreep


  • Gold price catches fresh bids on Thursday, although it remains well within a familiar trading range.
  • A softer USD, geopolitical risks and China’s economic woes act as a tailwind for the XAU/USD.
  • The Fed rate-cut uncertainty should cap any meaningful gains ahead of the crucial US CPI report.

Gold price (XAU/USD) attracts fresh buyers during the Asian session on Thursday and stalls the previous day’s retracement slide from the $2,040-2,042 supply zone. The precious metal, however, remains confined in a multi-day-old trading range and within the striking distance of a multi-week low touched on Monday as traders seek clarity about the Federal Reserve’s (Fed) rate-cut path before placing directional bets. Hence, the market focus will remain glued to the release of the latest consumer inflation figures from the United States (US).

Heading into the key data risk, the US Dollar (USD) is seen extending its consolidative price move in a familiar range amid the uncertainty over the timing of when the Fed will start cutting interest rates. This, along with geopolitical risks and China’s economic woes, keeps a floor on the safe-haven Gold price. However, investors have been scaling back their bets for a more aggressive policy easing by the Fed in the wake of the US economic resilience. This remains supportive of elevated US Treasury bond yields and should cap the non-yielding yellow metal.

Daily Digest Market Movers: Gold price benefits from softer US Dollar as traders await US CPI

  • The uncertainty over the Federal Reserve’s rate-cut path keeps the US Dollar bulls on the defensive and assists the Gold price in gaining some positive traction amid some repositioning trade ahead of the US consumer inflation figures.
  • The markets were quick to react to the Fed’s surprising dovish tilt at the December policy meeting and are now pricing in five interest rate cuts by the end of 2024, summing up to a cumulative of around 150 basis points (bps) of easing.
  • The incoming US macro data underscored the fundamental resilience of the American economy, which, along with mixed signals from Fed officials, forced investors to scale back their expectations for more aggressive policy easing.
  • New York Fed President John Williams said on Wednesday that the US central bank is in a ‘good place’ and has time to think about what’s next for rates, though would eventually need to get policy back to more neutral levels.
  • The yield on the benchmark 10-year US government bond holds steady above the 4.0% threshold and should cap any further gains for the non-yielding yellow metal ahead of the crucial US CPI report, due for release later today.
  • The headline US CPI is expected to rise by 0.2% in December, lifting the yearly rate to 3.2% from 3.1%, while the core gauge (excluding food and energy prices) is anticipated to ease to 3.8% YoY from 4.0% in the previous month.
  • Cooler-than-expected inflation data will give the Fed more reason to cut interest rates this year and turn out to be a negative trigger for the Greenback, which, in turn, should lead to a fresh leg up for the precious metal.
  • Conversely, a stronger US CPI print should provide the US central bank more headroom to keep interest rates higher for longer and boost the buck, forcing the XAU/USD to break through a multi-week low touched on Monday.

Technical Analysis: Gold price needs to break through $2,040-2,042 hurdle to attract buyers

From a technical perspective, any subsequent move up might continue to confront stiff resistance near the $2,040-2,042 region. A sustained strength beyond has the potential to lift the Gold price further towards last Friday’s swing high, around the $2,064 area en route to the $2,077 area. Some follow-through buying will negate any near-term negative outlook and set the stage for a move towards reclaiming the $2,100 round figure.

On the flip side, the $2,020 level, followed by the multi-week low around the $2,017-2,016 area and the 50-day Simple Moving Average (SMA), currently near the $2,013 region should protect any meaningful slide. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the Gold price to the $2,000 psychological mark. Given that oscillators on the daily chart have just started gaining negative traction, the downward trajectory could extend further towards the December swing low, around the $1,973 region. The XAU/USD might eventually drop to the $1,965-1,963 confluence, comprising the 100- and 200-day SMAs.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

USD   -0.05% -0.17% -0.13% -0.29% -0.21% -0.30% -0.13%
EUR 0.05%   -0.12% -0.08% -0.25% -0.17% -0.26% -0.07%
GBP 0.16% 0.12%   0.04% -0.14% -0.05% -0.16% 0.04%
CAD 0.14% 0.09% -0.03%   -0.15% -0.08% -0.16% 0.02%
AUD 0.29% 0.26% 0.14% 0.17%   0.10% -0.01% 0.18%
JPY 0.21% 0.16% 0.04% 0.06% -0.09%   -0.11% 0.08%
NZD 0.30% 0.29% 0.15% 0.18% 0.00% 0.09%   0.21%
CHF 0.11% 0.08% -0.04% -0.01% -0.18% -0.09% -0.19%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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