Gold slips as Dollar rises: Can It Weather the Storm?

Gold slips as dollar rises. Gold closed at a one-month low on Wednesday as the dollar and Treasury yields rose after the US reported stronger-than-expected retail sales in December. The decline rate of the yellow metal is supported by strong US economic indicators that have dampened expectations of a threatening interest rate cut.

Gold slips as dollar neared a one-month high after the US reported that retail sales rose 0.6% in December from a month earlier, up from 0.3% in November. The data show that the US economy is still warm despite high interest rates, dampening hopes for a quick rate cut from the Federal Reserve.

The Government bond yield also rose after the data. The two-year US yield was last up 13.5 basis points at 4.359%, while the 10-year yield was up 4.2 points at 4.109%. Sentiments of continued weakness from Chinese data releases are weighing on gold prices, as China is one of the world’s largest gold consumers. The country’s gross domestic product (GDP) grew by 5.2 percent last year, which was below expectations of 5.3 percent. In December, industrial production grew by 6.8% compared to a year ago, and retail sales fell to 7.4% in December from 10.1% in the previous month.

Technical Outlook – Gold Slips as Dollar Rises:

The price of gold fell by more than 0.80% intraday yesterday. Prices continued to move negative from the high of 63821 on 12/21/2023. Yesterday it hit a low of 61454 and reached a high of 61505, compared to the previous day’s close of 62015.

As per the outlook given on 11 January, after breaking price support at 61900 touched the first anticipated level of 61650 and moved to the second level of 61250.0.

The formation of two long descending candles on the chart indicates further weakness in the price of gold. Furthermore, prices broke major trend support and traded below the short-term moving average. All this aspect gives a bearish outlook for the near future.

On the downside, prices will soon test immediate support at 61350-61250. Additionally, a break below 61250 will extend the decline to 61050-60850.00.

Alternatively, on the upside, resistance is seen at 62120-62750.00.

Commodity Samachar
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