Gold futures XAU/USD recorded modest gains yesterday after the US inflation data for January.
The price of the yellow metal rebounded from a five-week low as the consumer price index slowed last month, although it did not fall as much as many had hoped.
However, XAU/USD gold prices benefited from expectations that the Federal Reserve will begin to adjust the tightening cycle. The strength of the US dollar is used and therefore the price of gold did not enjoy the resistance level of $1870 per ounce. It returned in its broad downward path towards the support level of $1842 per ounce at the time of writing the analysis.
Silver prices, gold's sister commodity, remained below $22. Silver futures rose $0.02, or 0.1%, to $21.873 an ounce.
Economic Outlook
A report indicated that the latest US consumer price index data is higher than economists expected. According to the Bureau of Labor Statistics (BLS), the US annual inflation rate slowed to 6.4% in January, down from 6.5% in December. The economists were expecting a reading of 6.2%. The annual core inflation rate also declined, falling to just 5.6%, down from 5.7%.
On a monthly basis, the Consumer Price Index (CPI) rose 0.5% last month, up from 0.1% the previous month. The core inflation rate rose by 0.4%, unchanged from December. Once again, the inflation rate in the services sector rose to 7.6%. In addition, many categories remain elevated, such as shelter (7.9%), or show signs of rising again, including food and energy.
There are concerns that inflation is flat and could be harder to beat than the Federal Reserve hopes, which could affect interest-rate-sensitive assets. Gold is generally considered sensitive to interest rate movements because it may affect the opportunity cost of holding the bullion that does not yield a return. Meanwhile, the U.S. dollar index (DXY), which measures the U.S. currency against a basket of other major currencies, fell 0.16% to 103.26 on Tuesday. Generally, a weaker price is good for dollar-denominated commodities because it makes them cheaper for foreign investors to buy. For other metals markets, copper futures fell to $4.07 per pound, platinum futures fell to $933.30 per ounce. Palladium futures advanced to $1481.50 an ounce.
Today's XAU/USD Gold Price Predictions:
- According to the performance on today's chart below, the gold price XAU/USD still maintains the downward trend.
- This is with the confirmation that its recent losses have moved the technical indicators towards oversold levels.
- The continuation of the strength of the US dollar may guarantee the bears control for a longer period of time on the trend.
- The important targets from which it is possible to buy now $1825 and $1810 level respectively.
On the other hand there will be no opportunity for the bulls to control without the XAU/USD gold price moving towards the resistance level of $1885 per ounce again. Today the price of gold will interact with the level of the US dollar following the announcement of US retail sales figures.
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