Gold Surge: Will US Inflation Lead to Breaking of Key Support?

Gold price was neutral yesterday. After December 28, 2023, the yellow metals retreated by more than one and a half percent.

The precious metal remains above multi-day support, however, as markets seek clarity on the Federal Reserve’s rate cut before making directional bets.  Bullion following the momentum of the US dollar, which is expected to continue its consolidating price move into a familiar range, it is uncertain when the Fed will start cutting interest rates. In addition, geopolitical risks and the economic problems of China and maintain the security price of yellow metals.

gold suffered sharp losses last week as traders steadily cut their bets that the Fed could start cutting interest rates as early as March 2024. This realization triggered a strong rally in the dollar, which also affected bullion prices. The dollar has rallied for most of the past week and rallied on Monday after posting its biggest weekly gain against other major currencies since July, ending a decline seen at the end of 2023.

However, investors reduced their holdings. calls for more aggressive policy from the US Federal Reserve due to the resilience of the US economy. This will continue to support elevated US Treasury yields and should limit the value of the relentless yellow metal. So the market’s focus remains on the release of the latest US consumer inflation data that will be released today.

Technical Outlook – Gold

Gold has turned negative since December 28, 2023. Prices fell more than 1.5% from a high of 63821 to yesterday’s low of 61966.00, posting a small loss of 0.29%.

As per the outlook given on January 4, 2024, the gold price retreated from 62750-62800 and will fall to the first forecast level of 62020, with the second level at 61650.00.

On the above chart, prices are trading at the key support level of 61900, which coincides with the low of the month. So, a break below it will soon take prices to 61650-61250. Otherwise, the failure of the break will restore the probability of recovery to 62500-63050.

Moreover, rather than technical considerations, the prices of the yellow metal today are driven by US inflation indicators. Below than last month’s reading can cause extreme volatility. Because it increases the likelihood that the Fed will cut interest rates later this year or vice versa

Commodity Samachar
Learn and Trade with Ease

Also Read: Will Today’s US Inflation Data Conjure Speculative Moves in the Market? , BOE Gov, Crude oil inventory and more. This week just got a bit more interesting!!

Recommended Read: Forex News Letter: Is the Market Vibing to the Incoming US Inflation Data?

Want help on your traders?

Chat with our Analyst