Gold Price Forecast: XAU/USD climbs to $1920 on weak US Dollar, post US data

Gold buyers stepped in around $1901 and lifted the yellow metal amidst an offered US Dollar.
Weak US economic data revealed on Wednesday increased the likelihood of a US recession.
Sentiment remains dampened, although US unemployment claims edged lower.
Federal Reserve officials continued to express the need to lift rates above 5%.

Christian Borjon Valencia FXStreet

Gold price snaps two days of losses and grinds higher on Thursday, lifted by a weak US Dollar (USD) and a dampened market mood, as Wall Street opened with losses. Soft US economic data released on Wednesday sounded the alarms of an upcoming recession amidst a high inflation environment. Therefore, the XAU/USD is trading at 1921.54, above its opening price by 0.95%.

Gold rises after US economic data and weakening USD

Before the US cash equity markets opened, the US Department of Labor revealed that Initial Jobless Claims for the week ending January 14 rose by 190K, less than the 214K estimated. The same report updated Continuing Jobless Claims rising to 1647K beneath the 1660K foreseen. At the same time, Building Permits dropped less than estimates, and the percentage change compared to November’s -10.6%, improved to -1.6%.

Staying in the US housing market data, Housing Starts slid to -1.4%, less than November’s -1.8% contraction. Aside from this, the Philadelphia Fed Manufacturing Index in the US rose to -8.9 in January from a revised -13.7 plunge in December. The report showed that more than 33% of the firms reported declines in activity.

Elsewhere, the US Dollar Index, a gauge of the buck’s value against a basket of G7 currencies, slides 0.17%, down at 102.239, while US bond yields recover some ground. The 10-year benchmark note rate sits at 3.397%, up two bps.

Money market futures traders are pricing in a 25 bps rate hike at the Federal Reserve’s January 31-February 1 meeting.

Despite softer-than-expected US economic data revealed on Wednesday, with Retail Sales plunging and Industrial Production nosediving, nevertheless, Fed officials stayed the course, vocal about lifting rates at least to the 5% threshold.

On Thursday, Boston Fed President Susan Collins said that it was appropriate to slow the pace of rate increases, though she emphasized its need to move above 5% and be held around for “some time.”

Gold Technical Analysis

XAU/USD daily chart supports the thesis of higher Gold prices. But buyers need to decisively clear the January 16 swing high of $1928 if they want to climb toward $2000. Once XAU/USD clears the former, that would pave the way to a $1958.April 20 swing high, ahead of the $2000 figure. Otherwise, a correction to $1900 is on the cards.

XAU/USD

Overview
Today last price	1919.71
Today Daily Change	16.24
Today Daily Change %	0.85
Today daily open	1903.47

Trends
Daily SMA20	1851.62
Daily SMA50	1805.76
Daily SMA100	1739.63
Daily SMA200	1776.42

Levels
Previous Daily High	1925.95
Previous Daily Low	1896.63
Previous Weekly High	1921.96
Previous Weekly Low	1865.22
Previous Monthly High	1833.38
Previous Monthly Low	1765.89
Daily Fibonacci 38.2%	1907.83
Daily Fibonacci 61.8%	1914.75
Daily Pivot Point S1	1891.42
Daily Pivot Point S2	1879.36
Daily Pivot Point S3	1862.1
Daily Pivot Point R1	1920.74
Daily Pivot Point R2	1938
Daily Pivot Point R3	1950.06

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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