- Summary:
- Gold price has a lot going for it and is likely to stay on the ascent as soft economic data and inflation are off track for central banks.
Gold price continued to trade near ten-week highs on Thursday after hitting $2,724 at the spot market. The commodity has gained 1.6% in the last five trading sessions, driven primarily by concerns over inflation. However, Wednesday’s US CPI figures injected fresh impetus into the market, after falling below forecast figures. That increased the likelihood of an interest rate cut by the Fed in the first quarter of the year.
The soft December inflation figures were followed by the release of lower-than-expected retail sales data. The world’s largest economy reported a 0.4% month-on-month growth in retail sales, below the forecast rate of 0.6%. Similarly, Core Retail Sales (excluding automobiles) fell short after growing at a rate of 0.4% versus analysts’ projection of 0.5%.
In addition, gold price got more upthrust from Initial Jobless Claims figures which rose more than expected in the week ending January 11. The number of Americans filing for unemployment benefits rose by 217k, substantially above the previous week’s 203k and above the forecast 210k.
More support for gold price upside comes from US treasury yields. Benchmark 10-year bonds were down by 5 basis points at the time of writing, bringing propulsion to non-yielding gold. The downside for gold price is the breakthrough in a ceasefire deal between Israel and Hamas, which has deducted the metal’s geopolitical risk premium.
Gold Price Prediction
The momentum on gold price calls for a continuation of the upside above the pivot mark at $2,712. That will likely see XAUUSD move higher and encounter the first hurdle at $2,725. However, an extended control by the buyers will enable it to surmount that barrier, which could push gains higher to test the second resistance at $2,735.
Alternatively, the sellers will take control if gold goes below the pivot mark. That could see the first support come at $2,700. The upside narrative will become invalid if the price breaks below that level. Also, such a momentum could drive the price lower and test $2,686.
