- For the second day, XAU/USD gold price is exposed to some limited bearish correction, settling around the level of 1907 dollars an ounce, at the time of writing the analysis.
- Prices are bouncing down after testing the resistance level 1921 dollars an ounce, the highest price in 8 months.
- Its gains came primarily amid a sharp decline in the price of the US dollar following the announcement of lower US inflation figures, which may reduce pressure on the US central bank to continue tightening.
Economic Outlook
The XAU/USD gold price is trading affected by the results of the recent economic data, as the preliminary US consumer confidence index in Michigan for January surpassed the expected reading at 60.5 with a reading of 64.6. On the other hand, the import price index for December exceeded expectations on a (yearly) and (monthly) basis, while the export price index did not live up to expectations.
Prior to that and most importantly, inflation in the United States fell to its lowest level in three months, reaching 6.5% on an annual basis, in line with expectations. The index (monthly) missed the estimate by 0% with a change of -0.1%. The consumer price index excluding food and energy for the period matched expectations (monthly) and (yearly) at 0.3% and 5.7%, respectively, while US Initial Jobless Claims for the past week exceeded the expected number of claims at 215K.
China's economy is facing a difficult recovery after years of tough Covid restrictions as the latest data shows signs that the worst of the recession is over. Where official figures showed that the economy grew at the second slowest pace since the 1970s last year, although data for the fourth quarter and December were better than economists expected. According to the advertiser, gross domestic product increased by 3 percent last year, which is far less than the 8.4 percent recorded in 2021, but higher than the average estimate of 2.7 percent in a Bloomberg survey of economists. In the last quarter of 2022, the Chinese economy grew by 2.9% from a year earlier, exceeding economists' expectations for a growth of 1.6%.
The government had initially set a target for growth at "around 5.5%" in 2022, although Covid lockdowns and the sudden abandonment of restrictions in December put the GDP target out of reach. Activity was weak in December, although not as bad as economists had feared.
Technical analysis of the XAU/USD gold price today:
In the near term, and according to the performance on the hourly chart, it appears that the yellow metal price, XAU/USD, is trading within a sharply ascending channel formation. This indicates a strong short-term bullish momentum in market sentiment. Therefore, the bulls will be looking to extend the current rise towards $1.927 or higher to $1935 an ounce. On the other hand, the bears will target potential pullbacks around $1,913 or lower at $1,906 an ounce.
On the long term, and according to the performance on the daily chart, it appears that the XAU/USD gold price has recently completed an upward breach to form an ascending channel. This indicates a rapid increase in the bullish bias in the market. Therefore, the bulls will target the long-term profit at around $1.943 or higher at $1.975 an ounce. On the other hand, bears will look to pounce on gains at around $1893 or lower at $1860 an ounce.
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