The continued strength of the US dollar was sufficient for further downward pressure on gold prices, XAU/USD, with losses towards the support level at $1830 an ounce. This is the lowest price in five weeks, and settled around the level of $1842 an ounce at the time of writing the analysis, waiting for any new news. The gold price, XAU/USD, is in a downward path, and it may be in a new bearish weekly closing, in case the upcoming US economic data favors the strength of the US dollar.
US stock indices fell after data showed that US retail sales in January jumped by the most in nearly two years. A gain of 3 percent on a monthly basis indicates that strong consumer spending will keep prices high, which could increase pressure on the US Federal Reserve to step up its efforts to curb inflation. US homebuilder sentiment increased in February by the most since mid-2020, as mortgage rate easing over the past several months boosted the housing market.
"Our biggest concern as we move forward here is the uncomfortable question of maybe the Fed not being constrained enough," Jim Bianco, founder of Bianco Research, said on Bloomberg TV. And “the assumption behind all the recession calls at the beginning of the year is that we raised interest rates too much, and that will hurt. But maybe not. Maybe all we did was switch to neutral and that's what the market is starting to figure out.”
Investors are still pondering the US CPI data and what it means for the US economy. “The Fed will read recent activity reports as supportive of plans to raise additional interest rates in the first half of this year,” wrote Bill Adams, chief economist at Comerica Bank. “However, the overall economy is doing better than expected so far in 2023, and the decline in inflation slowed at the turn of the year as well.”
The energy sector was the biggest drag on the S&P on Wednesday. Oil futures fell below $78 a barrel after the US Energy Information Administration reported that crude oil inventories rose by more than 16 million barrels last week. Shares of Devon Energy Corp sank 11 percent after fourth-quarter earnings missed estimates.
Sterling weakened as UK inflation fell more than expected in January and European stocks rose. Barclays PLC shares fell by as much as 10 percent after the bank's profits missed estimates. Bitcoin rose for a second day, approaching the $24,000 level and spurring gains in stocks exposed to the cryptocurrency.
XAU/USD gold price forecast today:
- The general trend of the XAU/USD gold price is still bearish, and with its recent losses, the technical indicators moved towards oversold levels.
- If the strength of the US dollar continues, the XAU/USD gold price may move towards deeper bearish levels, the closest to which are currently 1825 and 1800 dollars in a row.
- You can think of buying gold without risk.
The XAU/USD gold price will not have an opportunity to return to the bullish trend path without moving towards the $1885 resistance level. The dollar will be affected today, and therefore the gold market, by the announcement of the US producer price index readings, the number of weekly jobless claims, the reading of the Philadelphia Industrial Index, and the US housing market numbers.
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