Gold price (XAU/USD) has been on a steady decline in the past few weeks, currently trading near $1,835 during early Friday morning. This is the third consecutive weekly loss for the yellow metal, which could be linked to the United States economics that renew hawkish bias for the Federal Reserve (Fed). The US Producer Price Index (PPI) for January jumped the most since June with 0.7% MoM figure, bolstering hawkish bets and fueling US Treasury bond yields, US Dollar. Mixed updates on major XAU/USD consumers, US-China tension adds to the downside pressure.
In addition to the Federal Reserve concerns, the mixed headlines surrounding the Gold imports from India and China, as well as the latest geopolitical tension between the US and China, also seems to weigh on the XAU/USD price. India’s Gold imports plunged 76% in January from a year earlier to a 32-month low, as record high domestic prices dented physical demand. On the other hand, China’s Gold imports increased by 64% year-on-year last year, totaling up to 1,343 mt of gold, the highest level since 2018. US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News.
A lack of major data and events ahead of the next week’s Monetary Policy Meeting Minutes for the Federal Open Market Committee’s (FOMC) latest action also seems to keep the Gold bears on the driver’s seat. Gold price remains depressed below a two-week-old descending trend line, previous support, as well as a downward-sloping resistance line from February 02. Adding strength to the downside is the metal’s sustained trading below the 200-bar Simple Moving Average (SMA). Sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator join the downbeat Relative Strength Index (RSI) line, placed at 14, to suggest a slower grind toward the south.
With this, the Gold price decline towards two-month-old horizontal support, near $1,820 by the press time, appears imminent. However, the quote’s further downside will need a strong catalyst to break the stated key support and aim for the $1,800 threshold. Alternatively, a convergence of the aforementioned support-turned-resistance and an 11-day-old descending trend line offers strong resistance to the Gold price around $1,845, a break of which could allow the XAU/USD to pare recent losses and challenge the 200-SMA level of near $1,892. In a case where the Gold price remains firmer past $1,892, the $1,900 threshold will be important to watch for further guidance.
The recent bearish trend in Gold price (XAU/USD) could be attributed to the United States economics which renew hawkish bias for the Federal Reserve (Fed). Upbeat statistics from the US have recently pushed back the calls for the Fed’s policy pivot. That said, the latest FEDWATCH read from Reuters signals that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. The same allows the US Treasury bond yields and the US Dollar to remain firmer and weigh on the Gold price.
Apart from the Federal Reserve concerns, the mixed headlines surrounding the Gold imports from India and China, as well as the latest geopolitical tension between the US and China, also seems to weigh on the XAU/USD price. India’s Gold imports plunged 76% in January from a year earlier to a 32-month low, as record high domestic prices dented physical demand. On the other hand, China’s Gold imports increased by 64% year-on-year last year, totaling up to 1,343 mt of gold, the highest level since 2018. US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News.
A lack of major data and events ahead of the next week’s Monetary Policy Meeting Minutes for the Federal Open Market Committee’s (FOMC) latest action also seems to keep the Gold bears on the driver’s seat. Gold price remains depressed below a two-week-old descending trend line, previous support, as well as a downward-sloping resistance line from February 02. Adding strength to the downside is the metal’s sustained trading below the 200-bar Simple Moving Average (SMA). Sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator join the downbeat Relative Strength Index (RSI) line, placed at 14, to suggest a slower grind toward the south.
The Gold price decline towards two-month-old horizontal support, near $1,820 by the press time, appears imminent. However, the quote’s further downside will need a strong catalyst to break the stated key support and aim for the $1,800 threshold. Alternatively, a convergence of the aforementioned support-turned-resistance and an 11-day-old descending trend line offers strong resistance to the Gold price around $1,845, a break of which could allow the XAU/USD to pare recent losses and challenge the 200-SMA level of near $1,892. In a case where the Gold price remains firmer past $1,892, the $1,900 threshold will be important to watch for further guidance.
Overall, the Gold market has been under pressure in the past few weeks, with the recent US data bolstering hawkish bets for the Federal Reserve (Fed), US Treasury bond yields and the US Dollar. Mixed updates on major XAU/USD consumers, US-China tension adds to the downside pressure. A lack of major data and events ahead of the next week’s Monetary Policy Meeting Minutes for the Federal Open Market Committee’s (FOMC) latest action also seems to keep the Gold bears on the driver’s seat. Gold price remains depressed below a two-week-old descending trend line, previous support, as well as a downward-sloping resistance line from February 02.
The Gold price decline towards two-month-old horizontal support, near $1,820 by the press time, appears imminent. However, the quote’s further downside will need a strong catalyst to break the stated key support and aim for the $1,800 threshold. Alternatively, a convergence of the aforementioned support-turned-resistance and an 11-day-old descending trend line offers strong resistance to the Gold price around $1,845, a break of which could allow the XAU/USD to pare recent losses and challenge the 200-SMA level of near $1,892. In a case where the Gold price remains firmer past $1,892, the $1,900 threshold will be important to watch for further guidance.
It is important to note that the Gold market is highly sensitive to the US economic data and geopolitical developments. Investors should keep an eye on the upcoming US data, including the Federal Reserve’s (Fed) Monetary Policy Meeting Minutes for the FOMC’s latest action, for further guidance. Any positive data from the US could weigh on the Gold price, while any negative news could provide support for the XAU/USD. Investors should also pay attention to the US-China tensions, as well as the headlines surrounding India and China, for any further developments that could affect the Gold market.
