- XAU/USD gold futures rebounded after early weakness as the price of gold fell to $1,900 per ounce before prices stabilized around $1,928 per ounce as the US dollar lost ground.
- This is amid growing hopes that the Federal Reserve will slow the pace of raising interest rates to 25 basis points today Wednesday.
- XAU/USD gold prices fell sharply yesterday after the International Monetary Fund raised its forecast for global economic growth this year to 2.9% from a previous forecast of 2.7% in October.
- The Federal Reserve Bank will announce its decision on the US interest rate today. Economists expect the interest rate to rise by 25 basis points to a range of 4.5% to 4.75% amid signs of slowing inflation.
Economic Data
Data from the Department of Labor showed that the labor cost index in the United States rose by 1% on a quarterly basis in the last quarter of 2022, after rising by 1.3% in the previous quarter. And the S & P / Case-Shiller US home price index fell 0.8% on a monthly basis in November of 2022, the same as in October and representing a fifth consecutive decline.
A report from the Institute of Supply Management (ISM) said the Chicago PMI for the United States fell to 44.3 points in January 2023 from 44.9 in December compared to market expectations of 45. The reading indicated a contraction for the fifth month in a row. in business in the Chicago area.
Meanwhile, the American consumer confidence index issued by the Conference Board came in at 107.1 in January, after reaching a revised 109.0 in the previous month.
With the Federal Reserve lowering the US interest rate, it fuels enthusiasm among Wall Street investors that the hikes will soon stop. This optimism led to a rise in stock prices and a decrease in bond yields since the beginning of the year. High asset prices tend to encourage spending and accelerate growth - contrary to what the Federal Reserve wants.
To frustrate that brighter outlook, most analysts expect Powell to speak firmly at a press conference today about the need for more interest rate hikes. This would confirm the expectation that Federal Reserve officials issued collectively last month that their benchmark interest rate will exceed 5% in the coming months. Powell emphasized his concern - echoed by the Fed's top officials - that strong wage increases will keep inflation high among restaurants and hotels, health care, financial services and other areas of the country's service sector. As a result, Powell said some "pain" will be necessary to fully crush inflation - including the possible sharp increase in the unemployment rate.
Today's XAU/USD Gold Price Predictions:
- The general trend of gold prices XAU/USD is still upward.
- The psychological resistance of $1900 per ounce will remain important for the bulls to control the trend.
- If the price of the American dollar declines and the international central banks abandon the tightening tone, the gold market may receive a positive wound, especially if the expectations of the global economic recession continue.
The closest price resistance levels are currently 1938, 1955 and 1972 dollars respectively and the last two levels are the best selling. According to the performance on today's chart below, the price of gold XAU/USD will stabilize below the $1882 support level, which is important for the general trend to change downward again. One must be careful and wait until the reaction from the announcements of the international central banks and the American job figures passes.
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