- Gold price consolidates gains near $2,700, with eyes on US Retail Sales data.
- Tame US inflation data revive aggressive Fed rate cut talks, undermining the US Dollar and Treasury bond yields.
- Gold price looks north amid a bullish technical setup on the daily chart.
Gold price is trading close to the highest level in five weeks just above $2,700 in Thursday’s Asian trading. Traders look forward to a fresh batch of US economic data for the next leg higher in Gold price.
Attention turns to US Jobless Claims and Retail Sales data
This week’s tame inflation data from the US brought back expectations of interest rate cuts by the US Federal Reserve (Fed) on the table, which provided extra legs to the correction in the US Dollar (USD) and the US Treasury bond yields from multi-month highs. This accentuated the Gold price upside, with buyers briefly recapturing the $2,700 in early Asian trades this Thursday.
Traders piled up bets on a Fed rate cut in June, pricing in rising odds of a second rate reduction in 2025 after inflation data. The report indicated the recent market expectations of pricing out of rate cuts this year were excessive.
US Consumer Price Index (CPI) advanced in line with estimates at an annual rate of 2.9% in December from November's 2.7%. But core CPI, which excludes food and energy prices, rose by 3.2%, below forecasts for 3.3%. On Tuesday, the US annual PPI rose 3.3% in December, missing the expected 3.4% growth, while the core PPI inflation rose to 3.5% year-on-year (YoY) in the same period, compared to the market forecast of 3.8%.
The dovish Fed expectations, Chinese stimulus hopes and fading concerns over US President-elect Trump's disruptive trade tariffs support the prevalent risk-on market mood, keeping the safe-haven US Dollar broadly subdued and Gold price at higher levels.
Looking ahead, the focus shifts to more economic data releases from the US, including the December Retail Sales and the weekly Jobless Claims, which will provide more clarity on the Fed’s interest rate trajectory beyond January. Markets have fully priced in a rate-pause decision at the Fed’s policy meeting later this month. Gold price will also remain at the mercy of any speculations surrounding Trump’s tariff plans.
Gold price technical analysis: Daily chart
The short-term technical outlook for Gold price continues to support Gold buyers, courtesy of last week’s symmetrical triangle breakout.
The 14-day Relative Strength Index (RSI) points higher above the midline, currently near 60, suggesting that Gold price remains a ‘buy-the-dips’ trade in the coming days.
Gold price must seek a daily candlestick closing above the $2,700 barrier to initiate a fresh uptrend toward the $2,750 psychological level.
Ahead of that level, the December 12 high of $2,726 will challenge bearish commitments.
Conversely, strong support is located at the January 15 low of $2,670, below which sellers must crack the $2,640 demand area.
That zone is the confluence of the 21-day Simple Moving Average (SMA), 50-day SMA, 100-SMA and the triangle convergence, making it a powerful support.
If the downside momentum accelerates, the January 6 low of $2,615 could come to buyers’ rescue.
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds gains below 1.1000 ahead of US CPI release
EUR/USD is tirmimng gains while below 1.1000 in the European session on Thursday. The Euro gains on the German coalition deal and Trump's 90-day pause on reciprocal tariffs. Meanwhile, the US Dollar finds demand on profit-booknig ahead of the US CPI data release.
GBP/USD trades firm above 1.2850, US CPI data awaited
GBP/USD sustained the rebound above 1.2850 in European trading hours on Thursday. The British Pound capitalizes on risk appetite, courtesy of Trump's tariff pause, allowing the pair to recover ground. But further upside hinges on the US CPI data and US-Sino trade updates.
Gold price rallies further beyond $3,100; eyes all-time high amid US-China tariff war
Gold price continues to attract safe-haven flows amid rising US-China trade tensions. Bets for multiple Fed rate cuts weigh on the USD and also benefit the precious metal. A solid recovery in the risk sentiment fails to undermine the safe-haven XAU/USD pair.
XRP back above $2 liquidating $18M in short positions, will the rally continue?
Ripple seeks support above $2.0020 on Thursday after gaining 14% in the past 24 hours. The token trades at $2.0007 at the time of writing, reflecting growing bullish sentiment across global markets.
Tariff rollercoaster continues as China slapped with 104% levies
The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.